Baerg, Nicole and Krainin, Colin (2022) Divided Committees and Strategic Vagueness. European Journal of Political Economy, 74. p. 102240. DOI https://doi.org/10.1016/j.ejpoleco.2022.102240
Baerg, Nicole and Krainin, Colin (2022) Divided Committees and Strategic Vagueness. European Journal of Political Economy, 74. p. 102240. DOI https://doi.org/10.1016/j.ejpoleco.2022.102240
Baerg, Nicole and Krainin, Colin (2022) Divided Committees and Strategic Vagueness. European Journal of Political Economy, 74. p. 102240. DOI https://doi.org/10.1016/j.ejpoleco.2022.102240
Abstract
Recent research has found that central bank communications affect outcomes, for example, by moving financial markets and shaping inflation expectations. Missing from the literature is an understanding of why the content of communications varies in the first place. We present an agenda setting model of a monetary policy committee (MPC) with committee members who bargain over the degree of vagueness in central bank communications. We generate hypotheses about the types of MPCs that are expected to produce more or less vague communications. We test our propositions empirically using data from the U.S. Federal Open Market Committee (FOMC) during Arthur Burns’s tenure (1970–1978) and find evidence that the FOMC uses vaguer language when the committee chair and median committee member have aligned preferences than when their biases are opposed. Our results show that the institutional design of the MPC matters for the level of vagueness committees communicate to outside actors.
Item Type: | Article |
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Uncontrolled Keywords: | Bargaining Models; Central Bank Communication; Monetary Policy Committees |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Government, Department of |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 24 May 2022 16:34 |
Last Modified: | 30 Oct 2024 20:51 |
URI: | http://repository.essex.ac.uk/id/eprint/32894 |
Available files
Filename: Committees_Strategic_Vagueness.pdf
Licence: Creative Commons: Attribution-Noncommercial-No Derivative Works 3.0