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Committees as Substitutes for Commitment

Riboni, Alessandro (2010), Committees as Substitutes for Commitment, International Economic Review, 51, 1, p. 213-236. http://dx.doi.org/10.1111/j.1468-2354.2009.00577.x

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Type
Article accepté pour publication ou publié
Date
2010-02
Journal name
International Economic Review
Volume
51
Number
1
Publisher
Wiley
Pages
213-236
Publication identifier
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Author(s)
Riboni, Alessandro
Abstract (EN)
In this article, policies are negotiated in a committee by playing a dynamic voting game with an endogenous default (or status quo) policy. I show that joining a committee by maintaining a strong agenda setting power is a way for a decision maker to commit to a policy that in absence of committees is not time consistent. The disciplinary role of the endogenous status quo and the heterogeneity of preferences within the committee are two crucial ingredients to obtain this result. As a motivating example, this article focuses on the time consistency of monetary policy.
Subjects / Keywords
Time Consistency Problems; Dynamic voting; Committees
JEL
D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
E58 - Central Banks and Their Policies