Central Bank Structure and monetary policy uncertainty

Recent research has shown that partisanship causes monetary policy uncertainty. Since monetary policy is implemented by central banks, this paper models alternative central banks structure to analyze their effects on policy uncertainty in a two-party political system. The major result of the paper is that the length of govemors' terms plays a more important role than the number of govemors on the board. Moreover, it is shown that both postelectoral appointments and the membership of administration officials on the central bank board raise monetary policy uncertainty. The paper' results are illustrated by analyzing alternative structures of the Federal Reserve Board of Govemor