Optimal regional biases in ECB interest rate setting

Arnold, Ivo J.M.

doi:10.1016/j.ejpoleco.2005.08.001

“…Since the SGC shadows a supra-national central bank it is worth considering the distribution of the SGC's membership by nationality as the country of origin may create a bias in one direction or another (see, for instance, Arnold 2006). By this metric, on average, almost 30% of SGC members are from Germany.…”

Section: Shadow Committee Of the European Central Bankmentioning

confidence: 99%

What's in a second opinion? Shadowing the ECB and the Bank of England

Neuenkirch

¹

,

Siklos

²

2013

European Journal of Political Economy

View full text Add to dashboard Cite

One way of evaluating how well monetary authorities perform is to provide the public with a regular and independent second opinion. The European Central Bank (ECB) and the Bank of England (BoE) are shadowed by professional and academic economists who provide a separate policy rate recommendation in advance of the central bank announcement. In this paper, we systematically evaluate this second opinion and find that, first, the shadow committee of the ECB tends to be relatively less inflation averse than the ECB. In contrast, the shadow committee of the BoE proposes a more hawkish monetary policy stance than the BoE. Second, consensus within a shadow committee is far easier to reach when there is no pressure to change the policy rate. Third, the ECB's shadow committee is more activist than the ECB's Governing Council and a larger degree of consensus within the former brings about a greater likelihood that the two committees will agree. ABSTRACTOne way of evaluating how well monetary authorities perform is to provide the public with a regular and independent second opinion. The European Central Bank (ECB) and the Bank of England (BoE) are shadowed by professional and academic economists who provide a separate policy rate recommendation in advance of the central bank announcement. In this paper, we systematically evaluate this second opinion and find that, first, the shadow committee of the ECB tends to be relatively less inflation averse than the ECB. In contrast, the shadow committee of the BoE proposes a more hawkish monetary policy stance than the BoE. Second, consensus within a shadow committee is far easier to reach when there is no pressure to change the policy rate. Third, the ECB's shadow committee is more activist than the ECB's Governing Council and a larger degree of consensus within the former brings about a greater likelihood that the two committees will agree.

show abstract

“…On the other hand, Von Hagen and Brückner (2001) use empirical Taylor rule results to argue that the ECB already in its early years mainly focused on events in Germany and France in its monetary policy choice and succeeded to overcome the "median country's perspective on monetary policy". Arnold (2004) provides a theoretical rationale to support a stronger position for the large and relatively closed economies in EMU. In his view, small and relatively open (peripheral) economies trade more with countries outside the euro area.…”

Section: The Importance Of National Versus Aggregate Developmentsmentioning

confidence: 99%

What Drives ECB Monetary Policy?

Kool

¹

2006

Growth and Cohesion in the European Union

2

0

View full text Add to dashboard Cite

show abstract

“…Since the SGC shadows a supra-national central bank it is worth considering the distribution of the SGC's membership by nationality as the country of origin may create a bias in one direction or another (see, for instance,Arnold 2006). By this metric, on average, almost 30% of SGC members are from Germany.…”

mentioning

confidence: 99%

What's in a Second Opinion? Shadowing the ECB and the Bank of England

Neuenkirch

¹

,

Siklos

²

2013

View full text Add to dashboard Cite

One way of evaluating how well monetary authorities perform is to provide the public with a regular and independent second opinion. The European Central Bank (ECB) and the Bank of England (BoE) are shadowed by professional and academic economists who provide a separate policy rate recommendation in advance of the central bank announcement. In this paper, we systematically evaluate this second opinion and find that, first, the shadow committee of the ECB tends to be relatively less inflation averse than the ECB. In contrast, the shadow committee of the BoE proposes a more hawkish monetary policy stance than the BoE. Second, consensus within a shadow committee is far easier to reach when there is no pressure to change the policy rate. Third, the ECB's shadow committee is more activist than the ECB's Governing Council and a larger degree of consensus within the former brings about a greater likelihood that the two committees will agree.

show abstract

Optimal regional biases in ECB interest rate setting

Cited by 12 publications

References 16 publications

What's in a second opinion? Shadowing the ECB and the Bank of England

What's in a second opinion? Shadowing the ECB and the Bank of England

What Drives ECB Monetary Policy?

What's in a Second Opinion? Shadowing the ECB and the Bank of England

Contact Info

Product

Resources

About