Monetary Policy Committees: Individual and Collective Reputations

Abstract

This paper looks at how the reputation of a monetary policy making committee is jointly determined with the reputations of its individual members. I ask whether individuals have more or less incentive to gain a reputation for being tough on inflation when they are part of a group. I examine the effect of increased transparency-in the form of publishing the votes of individual members-on individuals' incentives to appear hard nosed. I look at how other institutional features of central banks affect the policy making body's incentive to refrain from inflation.

Keywords: Reputation, collective decision making, central banks

JEL Classification: D71, E50, E58