Crafting Consensus

Crafting Consensus offers a new theory of committee decision making and provides a rich understanding of modern-day central banking by studying central banks' communication with the public. Using extensive empirical analysis, Nicole Baerg explains how central bank transparency depends on the configuration of central bank committee members' preferences and the institutional rules governing how committee members set policy. The book shows that monetary policy committees comprised of bankers with opposing inflation preferences communicate more precisely and that precise communication then has positive economic effects.

Nicole Baerg is Assistant Professor in Government and co-director of the Essex Summer School in Social Science Data Analysis at the University of Essex. She worked previously as a research intern at the Federal Reserve Bank of Atlanta. Her research interests include comparative political institutions, central banking, political economy, quantitative text analysis, and European integration.

1 Crafting Consensus
1.1 The Girth of Greenspan's Briefcase
1.2 Central Bankers as Wordsmiths
1.3 The Statement-Writing Process
1.4 The Importance of Committee Composition
1.5 What Comes Next?
2 Monetary Policy Committees and Central Bank Communication
2.1 Introduction
2.2 Central Bank Committees and Institutional Design
2.2.1 Committee Size
2.2.2 Committee Composition
2.2.3 Decision-Making Protocol
2.3 Central Bank Communication
2.3.1 How to Communicate?
2.3.2 Formal Models of Political Communication
2.3.3 Communication and Expectations
2.4 Conclusion
3 A Model of Central Bank Communication
3.1 Introduction
3.2 The Model
3.2.1 Strategic Vagueness
3.2.2 Model Departures
3.2.3 Actors
3.2.4 Utility Functions
3.2.5 Game Sequence
3.2.6 Equilibrium
3.3 Disseminating Economic Information
3.4 Empirical Implications
3.5 Conclusion
4 Central Bank Committees and Political Communication
4.1 Introduction
4.2 Research Design
4.2.1 The Sample
4.2.2 Dependent Variables
4.2.3 Independent Variables
4.3 Empirical Model and Results
4.3.1 Results for Diversity on Policy Statement Uncertainty
4.3.2 Results for Diversity on Policy Editing
4.4 Conclusion
5 Central Bank Announcements and Inflation Expectations
5.1 Introduction
5.2 Origins of Inflation Expectations
5.3 Research Design
5.4 Data and Results
5.4.1 Dependent Variable: Posterior Inflation Expectations
5.4.2 Independent Variables
5.4.3 Descriptive Statistics
5.4.4 Regression Analysis
5.4.5 Sensitivity Analysis
5.5 Conclusion
6 Testing the Theory in Latin America
6.1 Introduction
6.2 Data and Analysis
6.2.1 Dependent Variable: Inflation
6.2.2 Independent Variables: Inflation Expectations
6.2.3 Information Precision
6.2.4 Control Variables
6.3 Main Results
6.4 Sensitivity Analysis
6.5 Conclusion
7 Putting It All Together
7.1 Summary of the Findings
7.2 Accountability and Transparency
7.3 Horizontal Accountability and Central Bank Appointments
7.4 Future Research
7.4.1 Rotational Voting
7.4.2 Qualifications
7.5 Applications beyond Central Banking
7.5.1 Judicial Politics
7.5.2 Corporate Governance
7.6 Final Thoughts