Influence and Interactions in Monetary Policy Committees.

Over the last two decades central bank independence has becomethe default for the conduct of monetary policy. In turn the decision-making process, within a central bank, has become - by design - muchmore transparent. The governance of this process is generally embed-ded in some type of committee. In turn, the use of committees tomake decisions about interest rates, and other aspects of monetarypolicy, has increased the amount of information –again deliberately –made available about this decision-making itself. This in turn has gen-erated a large literature on how committees make decisions, how theyinteract among themselves, and whether or not the outcome re‡ectsthe consensus, a majority decision, or perhaps the domination of oneor more members of the committee in the decision-making process.This paper o¤ers further insight into how decisions are made within acommittee and and proposes a method by which we can detect hiddeninteractions among members of a committee, once we’ve conditionedon the factors that in‡uence individual committee member’s decisionson interest rates. Using our method we are able to identify directionsof in‡uence. In other words, a committee member can in‡uence an-other committee member, but not necessarily be in‡uenced in returnby that member. In other words, that can be considerable asymmetryin the in‡uence committee members have, and how they are in‡uencedin turn by others