Working Paper

Optimal Monetary Policy Committee Size: Theory and Cross Country Evidence

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Theoretical and empirical studies of different sciences
suggest that an optimal committee consists of roughly 5-9
members, although it can swell mildly under specific
circumstances. This paper develops a conceptual model in
order to analyze the issue in case of monetary policy
formulation. The optimal monetary policy committee (MPC)
size varies according to the uncertainty of MPC members’
information influenced by the size of the monetary zone
and overall economic stability. Our conceptual model is
backed up with econometric evidence using a survey of 85
countries. The MPC size of large monetary zones (EMU,
USA, Japan) is close to the estimated optimal level, but
there exist several smaller countries with too many or too
few MPC members. 


Szilárd Erhart
Jose L. Vasquez Paz


Publication Date
JEL Classification
E50, E58