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Flexible Majority Rules for Central Banks
Author(s) -
GERSBACH HANS,
PACHL BERNHARD
Publication year - 2009
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2009.00218.x
Subject(s) - majority rule , interest rate , simple (philosophy) , frame (networking) , central bank , business , economics , monetary economics , econometrics , computer science , monetary policy , artificial intelligence , telecommunications , philosophy , epistemology
We propose a flexible majority rule for central‐bank committees where the size of the majority depends monotonically on the change in interest rate within a particular time frame. Small changes in the interest rate require a small share, while larger changes require a larger share of supporting votes. We show that flexible majority rules are superior to simple majority rules.