73th CARF Special Seminar : Prof. Andrew Levin
FinishedDate : 2016.10.21
Place :Daiwa Ubiquitous Ishibashi Nobuo Memorial Hall
Speaker : Professor Andrew Levin (Dartmouth College)
Speech Title : "Robust Design Principles for Monetary Policy Committees"
While a huge literature has examined the formulation of monetary policy strategies, there has been relatively little research on the design of monetary policy committees (MPCs). In this paper, we identify a number of key pitfalls in central bank governance and then proceed to formulate basic design principles for mitigating those risks. To protect against short-term political interference, monetary policy decisions should be made by a committee whose members have staggered terms of office that exceed the length of the political cycle. To help ensure the robustness of those decisions in the face of pervasive uncertainty about the economy and the monetary transmission mechanism, the MPC should have sufficient size, its members should be selected through a transparent process aimed at providing diverse perspectives and forms of expertise, and all members should be individually accountable for their views. To mitigate the risk of excessive insularity and group-think, the MPC should be subject to regular external reviews of all aspects of the policymaking process. Of course, the specific implementation of these principles will necessarily and appropriately depend on the institutional context of any particular central bank.
Andrew Levin is a professor of economics at Dartmouth College. His research on monetary economics has been highly influential, with a total citation count that ranks among the top 200 economists worldwide. Professor Levin received his Ph.D. in economics from Stanford University. He was a staff member at the Federal Reserve Board for two decades, and he served as a special adviser to Chairman Bernanke and then-Vice Chair Yellen on monetary policy strategy and communications from 2010 to 2012. He subsequently served as an adviser at the International Monetary Fund and then joined the Dartmouth faculty in 2015. Professor Levin is a regular visiting scholar at the Bank of Canada and at the International Monetary Fund, and he currently serves as an external adviser to the Bank of Korea. He has also had extensive interactions with many other central banks: He has been a consultant to the European Central Bank and a visiting scholar at the Bank of Japan and the Dutch National Bank, and he has provided technical assistance to the national banks of Albania, Argentina, Ghana, Macedonia, and Ukraine.