Too Many Cooks? Committees in Monetary Policy

How many people should decide monetary policy? In this article, we take an empirical perspective on this issue and analyze the relationship between the number of monetary policy decision makers and monetary policy outcomes. Using a new data set that characterizes central bank monetary policy committees (MPCs) in more than 30 countries from 1960 through 2006, we find a U‐shaped relationship between MPC size and inflation; our results suggest that the lowest level of inflation is reached at MPCs with an intermediate size of about five to nine members. Similar results are obtained for inflation variability. Other MPC characteristics also matter for monetary policy outcomes, though to a smaller degree. For instance, the membership composition of the MPC as well as the frequency of MPC membership turnover appears to affect economic variables.     

The Impact of Capital Inflows on Asset Prices in Emerging Asian Economies: Is Too Much Money Chasing Too Little Good?

In recent years, emerging Asian economies have experienced (i) large capital inflows, especially a surge in portfolio inflows, and (ii) an appreciation of asset prices such as stocks, land, and nominal and real exchange rates. We empirically investigate the effects of capital inflows on asset prices by employing a panel VAR model. The empirical results suggest that capital inflows indeed have contributed to asset price appreciation in the region, although capital inflow shocks explain a relatively small part of asset price fluctuations.     

Climbing the Technology Ladder Too Fast? New Evidence on Comparative Productivity Performance in Asian Manufacturing

This paper attempts to shed new light on the debate about the sources of rapid growth in Asian manufacturing. For the period from 1963 to 1997, a comparison of productivity levels in India, Indonesia, South Korea, and Taiwan with the United States as the reference country is provided. Using the industry-of-origin approach to international comparisons, varying development patterns are found for seven major manufacturing branches. Nevertheless, for all branches gaps in relative labor productivity and total factor productivity with the United States appeared to be big. Based on a technology ladder model, it is argued that low productivity might be due to rapid introduction of new technologies, leaving little time for efficient assimilation. J. Japan. Int. Econ., March 2002, 16(1) pp. 50–72. Groningen Growth and Development Center, Faculty of Economics, University of Groningen, Groningen, the Netherlands. © 2002 Elsevier Science (USA).Journal of Economic Literature Classification Numbers: N15, 047, 057.