Mumbai: Indian-American professor Gita Gopinath has been appointed as the chief economist at the International Monetary Fund, becoming the first woman to hold the position and illustrating the growing prominence of women in economic policymaking around the world. A new study by Donato Masciandaro and Paola Profeta, both of Bocconi University, Milan, Italy, and Davide Romelli of Trinity College Dublin, Ireland, analyses one impact of this trend by looking at the effects of women on monetary policy decisions.

Using data from central bank monetary policy committees for 103 countries between 2002-2016, the authors show that women adopt a more hawkish approach to monetary policy. Monetary policy committees with a higher proportion of women set higher interest rates for the same level of inflation. The authors find that these results are also supported in the voting patterns of female monetary policy committee members.

The study also shows that, while the presence of women on monetary policy committees has increased over the last decade, the average share of women remains low at 14%. Canada and Sweden are the notable exceptions where 60% of both committees were women.

India, however, is an underperformer in this regard. Currently, there is only one woman in RBI’s six-person monetary policy committee which was established in 2016 to focus exclusively on monetary policy. Since the paper only uses data till 2016, the authors use female representation data at the central board of directors in their analysis.

The central board of directors is the apex decision-making body of RBI responsible for the central bank’s broad direction and major policy decisions (such as demonetization).

Female representation on the central board is even weaker: as a recent Mint article highlighted, since 2016, not a single woman has been appointed on RBI board (bit.ly/2Osdd5V).

The authors argue that the emergence of women on monetary policy committees is associated with the central bank’s gender staff ratio rather than other measures of gender equality or national income levels. This implies increasing the overall presence of female staff in a central bank could help more women reach the board.

These findings support other research on the impact of women on corporate boards which has shown that women are more risk-averse than men and make more conservative decisions. If women are more aggressive in fighting inflation, the authors suggest that then a higher presence of women on central bank boards may help increase the credibility of central banks. More generally, the authors suggest that a more heterogeneous composition of monetary policy committees is not just important for diversity but can also have important implications in policymaking.

Also read: Do Women Matter In Monetary Policymaking?

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