Flexible Majority Rules for Central Banks

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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Year of publication:	2004-05
Authors:	Gersbach, Hans ; Pachl, Bernhard
Institutions:	C.E.P.R. Discussion Papers
Subject:	central bank \| flexible majority rules \| majority rule \| voting

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Extent:	application/pdf
Series:	CEPR Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	Number 4398
Classification:	D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legistures, and Voting Behavior ; E52 - Monetary Policy (Targets, Instruments, and Effects) ; E58 - Central Banks and Their Policies ; F33 - International Monetary Arrangements and Institutions
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005067504