Monetary Policy Committees, Independence, and Influence

We develop a model of monetary policy committee decision-making, building on the framework of games played through agents (GPTA). Interest groups seek to influence policy by offering action-contingent contracts to committee members. The resulting equilibrium admits a simple characterization and shows how institutional features—such as committee size—shape the extent of external influence. When political pressure pushes for expansive and inflationary policy, larger committees can enhance de facto independence by diluting this influence. We also show that when anti-inflationary pressures dominate, an appropriate choice of committee size can replicate the preference shift towards more conservativeness familiar from delegation frameworks, even when it is not feasible to appoint a conservative central banker in a systematic way.