DP3278 Credibility and Flexibility with Monetary Policy Committees

Author(s):	Ilian Mihov, Anne Sibert
Publication Date:	March 2002
Keyword(s):	inflationary bias, monetary policy committee, output stabilization, reputation
JEL(s):	E42, E52, E58
Programme Areas:	International Macroeconomics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=3278

We consider independent monetary policy committees as a simple way of attaining relatively low inflation without completely sacrificing the stabilization role of monetary policy. If central banker's types are unknown, then for a wide range of parameters an independent monetary policy committee is better than either a mandated zero-inflation rule or discretionary policy conducted by an opportunistic central banker.