The Central Bank Governor and Interest Rate Setting by Committee | Zendy

Emile van Ommeren | Zendy; Giulia Piccillo | Zendy

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The Central Bank Governor and Interest Rate Setting by Committee

Author(s) -

Emile van Ommeren,

Giulia Piccillo

Publication year - 2020

Publication title -

cesifo economic studies

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.475

H-Index - 27

eISSN - 1612-7501

pISSN - 1610-241X

DOI - 10.1093/cesifo/ifaa013

Subject(s) - governor , voting , robustness (evolution) , interest rate , monetary policy , taylor rule , politics , economics , inflation (cosmology) , carry (investment) , central bank , accounting , public administration , macroeconomics , political science , law , engineering , physics , theoretical physics , gene , biochemistry , chemistry , aerospace engineering

This article studies the role of central bank governors in monetary policy decisions taken by a committee. To carry out this analysis, we constructed a novel dataset of committee voting behaviour for six OECD countries for up to three decades. Using a range of Taylor rule specifications, we show that a change in governor significantly affects interest rate setting. We also observe systematic differences in interest rate rules based on the political party appointing the governor, with more inflation-averse policies under governors that are appointed by a right-wing political authority. We show the robustness of this result by using a wider dataset (including over 3000 observations from 12 countries). (JEL codes: E02, E5, P16)

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