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Discussion Paper Details

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Title: Flexible Majority Rules for Central Banks

Author(s): Hans Gersbach and Bernhard Pachl

Publication Date: May 2004

Keyword(s): central bank, flexible majority rules, majority rule and voting

Programme Area(s): International Macroeconomics and Public Economics

Abstract: We propose a flexible majority rule for central bank councils where the size of the majority depends monotonically on the change in interest rate within a particular time frame. Small changes in interest rate require a small share of supporting votes, even less than 50%. We show that flexible majority rules are superior to simple majority rules and can implement the optimal monetary policy under a variety of circumstances.

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Bibliographic Reference

Gersbach, H and Pachl, B. 2004. 'Flexible Majority Rules for Central Banks'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4398