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Determinants of the Size of a Monetary Policy Committee. Edition No. 1
VDM Publishing House, Dec 2009, Pages: 60
Theoretical studies and empirical evidence suggest that an optimal committee consists of roughly 5-9 members, although this result may vary somewhat under specific circumstances. This paper develops a conceptual model for the case of a monetary policy committee (MPC). The main conclusions are that (i) MPC size varies according to the size of the monetary zone and overall economic stability; (ii) for large monetary zones (EMU, USA, Japan), MPC size is close to the estimated optimal level; and (iii) in several countries, MPC size is considerably misaligned. Our model is backed by econometric evidence using a 2006 survey for 85 countries, which is available on the Web for further research.
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