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Rachel Lomax: Inflation Targeting in Practice - Models, Forecasts and Hunches
Rachel Lomax: Inflation targeting in practice - models, forecasts and hunches Speech by Ms Rachel Lomax, Deputy Governor of the Bank of England, to the 59th International Atlantic Economic Conference, London, 12 March 2005. I am most grateful to Jens Larsen, James Bell, Fabrizio Zampolli and Robin Windle for research support; and to Charlie Bean, Peter Andrews, Spencer Dale, Phil Evans, Laura Piscitelli and other colleagues at the Bank of England for helpful comments. * * * Introduction Five and a half years ago in his Monnet lecture Charles Goodhart1 was able to talk with some confidence of the features that particularly distinguished the UK’s approach to inflation targeting. Today with over 20 countries, in every habitable continent, formally operating some variant of inflation targeting and many more adopting some parts of the framework, all actively sharing experience and best practice, I suspect that most aspects of our approach would find a counterpart somewhere else in the world. But Charles’s focus on the Monetary Policy Committee’s (MPC) personal engagement in producing a published inflation forecast still seems to me to capture the essence of the UK’s approach. Today I want to talk about the role that forecasting has come to play in helping the MPC to take and communicate its decisions. In what sense does the Committee really ‘own’ the published forecasts that go out under its name? How much use do we make of models, and what models do we use? How far do our forecasts appear to drive interest rate decisions? And is there any evidence that this has helped to make policy more or less predictable? Finally I want to end by commenting on some of the issues raised by forecasts as a means of communication. -
The Run on the Rock
House of Commons Treasury Committee The run on the Rock Fifth Report of Session 2007–08 Volume II Oral and written evidence Ordered by The House of Commons to be printed 24 January 2008 HC 56–II [Incorporating HC 999 i–iv, Session 2006-07] Published on 1 February 2008 by authority of the House of Commons London: The Stationery Office Limited £25.50 The Treasury Committee The Treasury Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of HM Treasury, HM Revenue & Customs and associated public bodies. Current membership Rt Hon John McFall MP (Labour, West Dunbartonshire) (Chairman) Nick Ainger MP (Labour, Carmarthen West & South Pembrokeshire) Mr Graham Brady MP (Conservative, Altrincham and Sale West) Mr Colin Breed MP (Liberal Democrat, South East Cornwall) Jim Cousins MP (Labour, Newcastle upon Tyne Central) Mr Philip Dunne MP (Conservative, Ludlow) Mr Michael Fallon MP (Conservative, Sevenoaks) (Chairman, Sub-Committee) Ms Sally Keeble MP (Labour, Northampton North) Mr Andrew Love MP (Labour, Edmonton) Mr George Mudie MP (Labour, Leeds East) Mr Siôn Simon MP, (Labour, Birmingham, Erdington) John Thurso MP (Liberal Democrat, Caithness, Sutherland and Easter Ross) Mr Mark Todd MP (Labour, South Derbyshire) Peter Viggers MP (Conservative, Gosport). Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No. 152. These are available on the Internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. -
University of Surrey Discussion Papers in Economics By
råáp=== = = ======råáîÉêëáíó=çÑ=pìêêÉó Discussion Papers in Economics THE DISSENT VOTING BEHAVIOUR OF BANK OF ENGLAND MPC MEMBERS By Christopher Spencer (University of Surrey) DP 03/06 Department of Economics University of Surrey Guildford Surrey GU2 7XH, UK Telephone +44 (0)1483 689380 Facsimile +44 (0)1483 689548 Web www.econ.surrey.ac.uk ISSN: 1749-5075 The Dissent Voting Behaviour of Bank of England MPC Members∗ Christopher Spencer† Department of Economics, University of Surrey Abstract I examine the propensity of Bank of England Monetary Policy Committee (BoEMPC) members to cast dissenting votes. In particular, I compare the type and frequency of dissenting votes cast by so- called insiders (members of the committee chosen from within the ranks of bank staff)andoutsiders (committee members chosen from outside the ranks of bank staff). Significant differences in the dissent voting behaviour associated with these groups is evidenced. Outsiders are significantly more likely to dissent than insiders; however, whereas outsiders tend to dissent on the side of monetary ease, insiders do so on the side of monetary tightness. I also seek to rationalise why such differences might arise, and in particular, why BoEMPC members might be incentivised to dissent. Amongst other factors, the impact of career backgrounds on dissent voting is examined. Estimates from logit analysis suggest that the effect of career backgrounds is negligible. Keywords: Monetary Policy Committee, insiders, outsiders, dissent voting, career backgrounds, ap- pointment procedures. Contents 1 Introduction 2 2 Relationship to the Literature 2 3 Rationalising Dissent Amongst Insiders and Outsiders - Some Priors 3 3.1CareerIncentives........................................... 4 3.2CareerBackgrounds........................................ -
Monetary Policy Oversight in Comparative Perspective: Britain and America During the Financial Crisis
Political Science and Political Economy Working Paper Department of Government London School of Economics No. 3/2014 Monetary Policy Oversight in Comparative Perspective: Britain and America during the Financial Crisis Cheryl Schonhardt-Bailey (LSE) Monetary Policy Oversight in Comparative Perspective: Britain and America During the Financial Crisis Cheryl Schonhardt-Bailey Government Department London School of Economics and Political Science Houghton Street London WC2A 2AE [email protected] http://personal.lse.ac.uk/schonhar/ This study examines deliberation on monetary policy oversight in the US and UK between 2006 and 2009. It employs reciprocity as the key criterion for judging the quality of monetary policy oversight deliberation (i.e., committee participants are expected to engage with one another, taking up and responding to the reasons offered by other participants). Using automated content analysis, the empirical finding is that reciprocity is clearly evident in the parliamentary oversight committee, but much less so in the two congressional committees. The two country cases represent very different approaches to legislative oversight, with the UK demonstrating a committee approach both in terms of the testimony of the monetary policy body and of the behaviour of the legislative committee, while the US demonstrates a focus on a series of individual contributions both from the Fed chairman and Members of Congress. In the US, this appears to allow greater scope to divert discussion away from the primary focus of hearings (i.e., monetary policy). 1 I. Introduction In normal economic times, clashes between politicians and central bankers in legislative oversight hearings on monetary policy are not typically considered worthy of headline news coverage. -
Reform of the Bank of England a New Bank for a New Governor
Reform of the Bank of England A new Bank for a new Governor James Barty Policy Exchange is the UK’s leading think tank. We are an educational charity whose mission is to develop and promote new policy ideas that will deliver better public services, a stronger society and a more dynamic economy. Registered charity no: 1096300. Policy Exchange is committed to an evidence-based approach to policy development. We work in partnership with academics and other experts and commission major studies involving thorough empirical research of alternative policy outcomes. We believe that the policy experience of other countries offers important lessons for government in the UK. We also believe that government has much to learn from business and the voluntary sector. Trustees Daniel Finkelstein (Chairman of the Board), Richard Ehrman (Deputy Chair), Theodore Agnew, Richard Briance, Simon Brocklebank-Fowler, Robin Edwards, Virginia Fraser, Edward Heathcoat Amory, David Meller, George Robinson, Robert Rosenkranz, Andrew Sells, Patience Wheatcroft, Rachel Whetstone and Simon Wolfson. Acknowledgements We would like to thank all of the people who have given us their views on the Bank, its historic performance and what could be done to reform it. We would particularly like to thank Dan Conaghan whose book The Bank (Inside the Bank of England) is an excellent read and a great source of information. This project was also enhanced by the panel debate we had with Sir John Gieve and Andrea Leadsome MP on the future of the Bank, which prompted a number of extra lines of enquiry for us. Finally we would like to thank those who have contributed to the Financial Policy unit at Policy Exchange without whose financial assistance this report could not have been produced. -
Work of the Committee in 2005–06
House of Commons Treasury Committee Work of the Committee in 2005–06 Third Report of Session 2006–07 Report, together with formal minutes Ordered by The House of Commons to be printed 16 January 2007 HC 191 Published on 26 January 2007 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Treasury Committee The Treasury Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of HM Treasury and its associated public bodies. Current membership Rt Hon John McFall MP (Labour, West Dunbartonshire) (Chairman) Mr Colin Breed MP (Liberal Democrat, South East Cornwall) Jim Cousins MP (Labour, Newcastle upon Tyne Central) Angela Eagle MP (Labour, Wallasey) Mr Michael Fallon MP (Conservative, Sevenoaks), (Chairman, Sub-Committee) Mr David Gauke MP (Conservative, South West Hertfordshire) Ms Sally Keeble MP (Labour, Northampton North) Mr Andrew Love MP (Labour, Edmonton) Kerry McCarthy MP (Labour, Bristol East) Mr George Mudie MP (Labour, Leeds East) Mr Brooks Newmark MP (Conservative, Braintree) John Thurso MP (Liberal Democrat, Caithness, Sutherland and Easter Ross) Mr Mark Todd MP (Labour, South Derbyshire) Peter Viggers MP (Conservative, Gosport) The following members were also members of the Committee during Session 2005–06: Lorely Burt MP (Liberal Democrat, Solihull) Damian Green MP (Conservative, Ashford) Susan Kramer MP (Liberal Democrat, Richmond Park) David Ruffley MP (Conservative, Bury St Edmunds) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. -
Chairmans Report.Pdf
Dean House Vernham Dean Andover, Hants SP11 0JZ Tel: +44 (0)1264737552 Fax: +44 (0)20 7900 2585 Email: [email protected] www.spe.org.uk ANNUAL REPORT OF THE CHAIRMAN 2017‐18 2017‐18 has been a transformative year for the Society. In January, at the start of the Society’s 65th year, we changed our name from Society of Business Economists (SBE) to Society of Professional Economists (SPE). There were two primary reasons why we made this change: 1. To broaden our appeal to a wider and more diverse range of economists. I am pleased to report that the Society’s membership has risen by more than 10% in the 10 months since we made the change and that it continues to grow rapidly. 2. To mark the Society’s expansion into the area of professional development. At the start of this year we launched a new professional development programme for economists, which is being run by the Society’s Head of Professional Development, Andy Ross. Through the hard work of Andy and his team, the popularity of these courses has grown steadily through the year. Meanwhile, the programme of events that the Society is holding has never been stronger. Since the start of the 2017‐2018 financial year, the Society has hosted three central bank governors, three deputy governors, the Chairman of the Office for Budget Responsibility, the Chief Economic Advisor to HM Treasury and a host of economics professors and other experts. We have heard speakers discussing topics ranging from Brexit to Intergenerational Fairness and from the UK’s long‐run economic performance to the outlook for the housing market. -
Bank of England Quarterly Bulletin 2009 Q1
52 Quarterly Bulletin 2009 Q1 Bank of England speeches A short summary of speeches made by Bank personnel since Seven lessons from the last three years publication of the previous Bulletin are listed below. Sir John Gieve, Deputy Governor, February 2009. www.bankofengland.co.uk/publications/speeches/2009/ What should be done about rising unemployment in the speech377.pdf United Kingdom? David Blanchflower, Monetary Policy Committee member, In his final speech as Deputy Governor, John Gieve looked back February 2009. at the period of Great Stability and described seven lessons www.bankofengland.co.uk/publications/speeches/2009/ from his time at the Bank of England. First, he believed speech379.pdf regulators should have a say in banks’ risk management, as the recent crisis has shown that banks relied too heavily on flawed In this speech, David Blanchflower explained that while systems. Second, he outlined the gaps that existed in the monetary and fiscal policy could stimulate the economy in the United Kingdom’s arrangements for resolving failing banks. short term, the medium-term prospects for growth relied on a He welcomed the new arrangements established by the healthy financial sector to channel savings into the most Banking Act which bridge those gaps. Third, he noted that productive investments. One risk to the economic outlook international co-operation and co-ordination procedures for was that large increases in unemployment, coupled with resolving cross-border institutions were lacking and needed negative equity in the housing market, could lead to rising improvement. Fourth, he argued that the current generation arrears and defaults on mortgage loans. -
Independent Review of UK Economic Statistics March 2016 Independent Review of UK Economic Statistics Professor Sir Charles Bean
Front cover Independent review of UK economic statistics Independent Review of UK Economic Statistics Professor Sir Charles Bean March 2016 March 2016 2904936 Cover and Dividers v1_0.indd 1 09/03/2016 13:43 Independent Review of UK Economic Statistics Professor Sir Charles Bean March 2016 ii Independent Review of UK Economic Statistics Contents Chapter 1: Introduction and overview 1 Background to the Review 1 A vision for the future provision of economic statistics 6 Recommendations: Measuring the economy 8 Recommendations: ONS capability and performance 10 Recommendations: Governance of statistics 13 Content outline 15 Chapter 2: Measuring the modern economy – established challenges 19 Measuring GDP 19 Measuring services 35 Measuring financial inter-connectedness 42 Regional statistics 47 Measuring the labour market 50 Physical capital 58 Land market statistics 62 Addressing established statistical limitations 68 Chapter 3: Measuring the modern economy – emerging challenges 71 Value added in the digital modern economy 71 The sharing economy 91 Intangible investment 98 Accounting for quality change 106 Understanding the international location of economic activity 112 Keeping abreast of an evolving economy 116 Chapter 4: Effectiveness of ONS 121 Recent history of ONS 121 ONS resources 124 Recent ONS performance 130 Culture, Capability and Collaboration 137 Survey data sources 156 Administrative data and alternative data sources 162 Contents iii Data science capability 167 Technology and data infrastructure 176 Dissemination of ONS statistics -
Formal Minutes
House of Commons Treasury Committee Formal Minutes Session 2005–06 Treasury Committee: Formal Minutes 2005–06 1 Proceedings of the Committee Thursday 14 July 2005 Members present: Angela Eagle John McFall Damian Green Mr George Mudie Ms Sally Keeble Mr David Ruffley Susan Kramer Mr Mark Todd Mr Andrew Love Peter Viggers Kerry McCarthy Members disclosed their interests, pursuant to the resolution of the House of 13 July 1992 For details of declarations of interest see Appendix. 1. Election of Chairman John McFall was called to the Chair. Ordered, That the Chairman do report his election to the House. ** 2. The Committee’s programme of work The Committee considered this matter. 3. Sub-Committee Ordered, That a Sub-Committee be appointed, to examine the work of the minor departments accountable to the Treasury and other matters referred to it by the main Committee.—(The Chairman.) Ordered, That all members of the Committee be members of the Sub-Committee.—(The Chairman.) Ordered, That Mr Michael Fallon be Chairman of the Sub-Committee.—(The Chairman.) 4. Cash machine charges Draft Special Report (Cash machine charges: Government Response to the Committee’s Fifth Report of Session 2004–05), proposed by the Chairman, brought up, read the first and second time, and agreed to. Resolved, That the Report be the First Special Report of the Committee to the House. Ordered, That the Chairman make the Report to the House. Ordered, That the Government’s response to the Committee’s Fifth Report (Cash machine charges) be appended to the Report. 5. Excise Duty Fraud Draft Special Report (Excise Duty Fraud: Government Response to the Committee’s Fourth Report of Session 2004–05), proposed by the Chairman, brought up, read the first and second time, and agreed to. -
MACROECONOMIC POLICY 'INFLATION TARGETRY' in PRACTICE Summary Reading
EC307 EPUK - Macroeconomic Policy Jennifer Smith - University of Warwick ECONOMIC POLICY IN THE UK MACROECONOMIC POLICY ‘INFLATION TARGETRY’ IN PRACTICE Summary In 1992 the UK adopted an inflation target. This lecture discusses the development of inflation targeting since then. The monthly policymaking process is described, including how this has changed under the Labour government. In the next few lectures we will investigate various characterisations of inflation targeting, assess the performance of this regime, discuss the best specification for an inflation target and compare inflation targeting to other possible macro policy regimes. Reading Influential Bank views King, Mervyn (2005) “Monetary Policy: Practice Ahead of Theory” http://www.bankofengland.co.uk/publications/speeches/2005/speech245.pdf King, Mervyn (2002) “The Monetary Policy Committee Five Years On”, http://www.bankofengland.co.uk/publications/speeches/2002/speech172.pdf King, Mervyn (2000), “Monetary policy: theory in practice”, http://www.bankofengland.co.uk/publications/speeches/2000/speech67.htm King, Mervyn (1997) “The Inflation Target Five Years On” http://www.bankofengland.co.uk/publications/speeches/1997/speech09.pdf Other useful Bank papers Walton, David (2005) “Monetary policy challenges facing a new MPC member” http://www.bankofengland.co.uk/publications/speeches/2005/speech254.pdf Bell, Marian (2005), “Communicating monetary policy in practice” http://www.bankofengland.co.uk/publications/speeches/2005/speech244.pdf Institutional (but also contain assessments & principles) Key dates since 1990: http://www.bankofengland.co.uk/monetarypolicy/history.htm Monetary policy framework: http://www.bankofengland.co.uk/monetarypolicy/framework.htm BoE Core Purposes: http://www.bankofengland.co.uk/about/corepurposes/index.htm MPC: http://www.bankofengland.co.uk/monetarypolicy/overview.htm Rodgers, Peter (1998), “The Bank of England Act”, Bank of England Quarterly Bulletin, (May) 93-9. -
Speech by Kate Barker
Monetary Policy in the UK – The Framework and Current Issues Speech given by Kate Barker, Monetary Policy Committee, Bank of England At the National Association of Business Economics Policy Conference, Washington DC. 21 March 2005 I am extremely grateful to Rebecca Driver and Miles Parker for their research towards this speech, and to Peter Andrews, Charles Bean, Marian Bell, Rob Elder, Katie Farrant, Jennifer Greenslade, Lavan Mahadeva, Steve Nickell, Lea Paterson, Sally Reid, Sally Srinivasan, Jumana Salaheen, Alison Stuart and Jan Vlieghe, for their helpful and pertinent comments. Of course, this speech reflects my personal views. 1 All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx 2 Monetary Policy in the UK – the Framework and Current Issues Greetings. It is a great pleasure for me to have been invited over to discuss with you our approach to monetary policy in the UK. The UK system is still relatively young – just coming up to its eighth birthday. The key changes made in 1997 were to give the Bank of England operational independence to conduct monetary policy, and to specify a point inflation target. Initially somewhat controversial, central bank independence is now strongly and widely supported. Today, after a brief description of the key features of our framework, I will discuss some issues related to inflation targeting, and also look at the implications for monetary policy of recent trends in UK productivity. The UK’s inflation targeting framework The monetary policy framework put in place by the newly-elected Labour Government in May 1997 leaves the Government to set the inflation target, which is confirmed or changed annually in the finance minister’s Budget.