Dissent in monetary policy decisions

Voting records indicate that dissents in monetary policy committees are frequent and predictability regressions show that they help forecast future policy decisions. In order to study whether the latter relation is causal, we construct a model of committee decision making and dissent where members' decisions are not a function of past dissents. The model is estimated using voting data from the Bank of England and the Riksbank. Stochastic simulations show that the decision-making frictions in our model help account for the predictive power of current dissents. The effect of insti- tutional characteristics and structural parameters on dissent rates is examined using simulations as well.

The Transmission of Monetary Policy in a Multi-Sector Economy

This paper constructs and estimates a sticky-price, Dynamic Stochastic General Equilibrium model with heterogenous production sectors. Sectors differ in price stickiness, capital-adjustment costs and production technology, and use output from each other as material and investment inputs following an Input-Output Matrix and Capital Flow Table that represent the U.S. economy. By relaxing the standard assumption of symmetry, this model allows different sectoral dynamics in response to monetary policy shocks. The model is estimated by Simulated Method of Moments using sectoral and aggregate U.S. time series. Results indicate 1) substantial heterogeneity in price stickiness across sectors, with quantitatively larger differences between services and goods than previously found in micro studies that focus on final goods alone, 2) a strong sensitivity to monetary policy shocks on the part of construction and durable manufacturing, and 3) similar quantitative predictions at the aggregate level by the multi-sector model and a standard model that assumes symmetry across sectors.

The Dynamic (In)efficiency of Monetary Policy by Committee

This paper develops a model where the value of the monetary policy instrument is selected by a heterogenous committee engaged in a dynamic voting game. Committee members differ in their institutional power and, in certain states of nature, they also differ in their preferred instrument value. Preference heterogeneity and concern for the future interact to generate decisions that are dynamically ineffcient and inertial around the previously-agreed instrument value. This model endogenously generates autocorrelation in the policy variable and provides an explanation for the empirical observation that the nominal interest rate under the central bank’s control is infrequently adjusted.

Some Implications of the Zero Lower Bound on Interest Rates for the Term Structure and Monetary Policy

In an economy where cash can be stored costlessly (in nominal terms), the nominal interest rate is bounded below by zero. This paper derives the implications of this nonnegativity constraint for the term structure and shows that it induces a nonlinear and convex relation between short- and long-term interest rates. As a result, the long-term rate responds asymmetrically to changes in the short-term rate, and by less than predicted by a benchmark linear model. In particular, a decrease in the short-term rate leads to a decrease in the long-term rate that is smaller in magnitude than the increase in the long-term rate associated with an increase in the short-term rate of the same size. Up to the extent that monetary policy acts by affecting long-term rates through the term structure, its power is considerably reduced at low interest rates. The empirical predictions of the model are examined using data from Japan.

Nonlinear Monetary Policy Rules: Some New Evidence for the U.S.

This paper derives optimal monetary policy rules in setups where certainty equivalence does not hold because either central bank preferences are not quadratic, and/or the aggregate supply relation is nonlinear. Analytical results show that these features lead to sign and size asymmetries, and nonlinearities in the policy rule. Reduced-form estimates indicate that US monetary policy can be characterized by a nonlinear policy rule after 1983, but not before 1979. This finding is consistent with the view that the Fed's inflation preferences during the Volcker-Greenspan regime differ considerably from the ones during the Burns-Miller regime.

Monetary Policy by Committee:Consensus, Chairman Dominance or Simple Majority?

This paper studies the theoretical and empirical implications of monetary policy making by committee under three different voting protocols. The protocols are a consensus model, where super-majority is required for a policy change; an agenda-setting model, where the chairman controls the agenda; and a simple majority model, where policy is determined by the median member. These protocols give preeminence to different aspects of the actual decision making process and capture the observed heterogeneity in formal procedures across central banks. The models are estimated by Maximum Likehood using interest rate decisions by the committees of five central banks, namely the Bank of Canada, the Bank of England, the European Central Bank, the Swedish Riksbank, and the U.S. Federal Reserve. For all central banks, results indicate that the consensus model is statically superior to the alternative models. This suggests that despite institutionnal differences, committees share unwritten rules and informal procedures that deliver observationally equivalent policy decisions.

Durable Goods, Inter-Sectoral Linkages and Monetary Policy

Barsky, House and Kimball (2007) show that introducing durable goods into a sticky-price model leads to negative sectoral comovement of production following a monetary policy shock and, under certain conditions, to aggregate neutrality. These results appear to undermine sticky-price models. In this paper, we show that these results are not robust to two prominent and realistic features of the data, namely input-output interactions and limited mobility of productive inputs. When extended to allow for both features, the sticky-price model with durable goods delivers implications in line with VAR evidence on the effects of monetary policy shocks.

Monetary Policy When Wages Are Downwardly Rigid: Friedman Meets Tobin

In a monetary economy with downwardly rigid wages, the central banker should target a low, but strictly positive, inflation rate.

Ethics in Health Policy for Allergy : A Practical Approach for Decision-Makers

Comme à l’approche d’un tsunami, l’incidence grandissante des allergies affecte maintenant plus de 30% de la population des pays développés. Étant la cause de nombreuses morbidités et un risque significatif de mortalité, les allergies nécessitent des dépenses exorbitantes au système de santé et constituent une des plus importantes sources d’invalidité. Cette thèse a pour but de contribuer à faciliter la prise de décision éclairée dans le développement de politiques en santé en lien avec cette maladie immunitaire chronique en utilisant des principes d’éthique comme outils pour guider le développement de politiques en santé. Le premier chapitre démontre le présent déficit d’analyses des enjeux éthiques en allergologie et démontre de quelle façon les réflexions en éthique peuvent guider le développement de politiques et l’élaboration de stratégies appliquées aux allergies. Les chapitres qui suivront présentent des applications spécifiques des principes d’éthiques ciblant des contextes précis comme des méthodes qui fournissent des outils de réflexion et des cadres théoriques qui peuvent être appliqués par les décideurs pour guider des interventions en santé concernant les allergies et les conditions de co-morbidité reliées. Le second chapitre présente un cadre théorique pour l’évaluation et la priorisation d’interventions en santé publique par la diminution des allergènes présents dans l’environnement basées sur des théories de justice sociale. Les critères entourant les politiques d’évaluation se concentrent sur les enjeux éthiques référant aux populations vulnérables, sur une distribution plus égale des bénéfices pour la santé, et sur le devoir d’éviter la stigmatisation. Le troisième chapitre offre aux administrateurs et au personnel infirmier du réseau scolaire un cadre décisionnel pour guider le développement de politiques efficaces et éthiquement justifiables concernant les allergies alimentaires pour les écoles. Dans ce contexte, les principes de base d’éthique en santé publique et en bioéthique - par exemple, l’empowerment des populations vulnérables dans la prise en charge de leur santé et la protection de la confidentialité du dossier médical - servent d’outils pour évaluer les politiques. Le dernier chapitre emploie les principes de base de recherche en éthique comme méthode pour développer un argumentaire en faveur de la réforme des réglementations entourant la production de médicaments immunothérapeutiques. La nécessité éthique d’éviter les risques de méfait à l’endroit du sujet humain dans la recherche permettra de servir de guide pour structurer de futures politiques en santé publique en égard à la production d’immunothérapeutiques à l’échelle mondiale.