DOCSLIB.ORG

Bank of England Quarterly Bulletin May 1999

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Bank of England Quarterly Bulletin May 1999 Bank of England Quarterly Bulletin May 1999 Volume 39 Number 2 Bank of England Quarterly Bulletin May 1999 Summary 131 Recent economic and financial developments Markets and operations 133 Box on commodity currencies 136 Box on Bank of England participation in BIS loan to Brazil 138 Box on ECB monetary policy operations 148 The international environment 152 Report The transmission mechanism of monetary policy 161 Box on how the Bank sets interest rates 163 Research and analysis Monetary policy and the yield curve 171 The Bank’s use of survey data 177 Monetary policy and uncertainty 183 An effective exchange rate index for the euro area 190 Box on method for calculating the euro-area effective exchange rate index 192 The financing of small firms in the United Kingdom 195 Structural changes in exchange-traded markets 202 Box on US equity markets 205 Speeches Developments in small business finance Speech by the Governor given at the KPMG Profitability Seminar on 1 March 1999 207 Economic models and monetary policy Speech by John Vickers, Executive Director and Chief Economist, given at the National Institute of Economic and Social Research on 18 March 1999 210 Inflation and growth in the service industries Speech by Deanne Julius, member of the Bank’s Monetary Policy Committee, delivered as the Vital Topics Lecture at the Manchester Business School on 23 March 1999 217 Volume 39 Number 2 Printed by Park Communications © Bank of England 1999 ISSN 0005-5166 The Quarterly Bulletin and Inflation Report Inflation Report The Inflation Report reviews developments in the UK economy and assesses the outlook for (published separately) UK inflation over the next two years in relation to the inflation target. The Report starts with a short overview section; the second section investigates money and financial markets, and the following three sections examine demand and output, the labour market and pricing behaviour respectively. The concluding sections present a summary of monetary policy since the February Report, an assessment of medium-term inflation prospects and risks, and information about non-Bank forecasts. Markets and operations The article reviews developments in international and domestic financial markets in the first (pages 133–51) quarter, and describes official operations in financial markets. The euro was successfully introduced over the New Year weekend. Euro-area economic data released during the first quarter generally indicated low inflation and weaker-than-expected growth; against this background, the euro exchange rate and the profile of expected future interest rates fell. In the United States, output data were unexpectedly strong, although inflation remained low, and market expectations about future interest rates were revised upwards. The dollar appreciated against both the euro and the yen. In Japan, there were important changes in monetary and public debt management policies. In the United Kingdom, official interest rates were cut by a total of 75 basis points during the quarter. Survey evidence indicated some recovery in business confidence, and the pound appreciated against the euro, though it fell against the dollar. Equity prices rose in most major markets. The international This article discusses developments in the global economy since the February 1999 environment Quarterly Bulletin. Growth in the United States remained well above trend in the fourth (pages 152–60) quarter of 1998, and recent data suggest continued strength into 1999. Japan stayed in recession, with a sharp fall in GDP in the fourth quarter. Euro-area GDP growth was on a downward trend throughout 1998. Inflation was broadly unchanged in the major industrialised countries in 1999 Q1. OPEC agreed oil-supply quotas on 23 March, and oil prices have risen to $16.80 dollars per barrel, an increase of more than 60% since 1 January. The Bank of Japan lowered the overnight call rate towards zero during February, and the European Central Bank cut its main refinancing rate by half a percentage point on 8 April. The Federal Reserve left US rates unchanged throughout the period. Output started to recover in a number of newly industrialised economies in Asia. The Brazilian authorities were able to reduce official interest rates without prompting large net capital outflows. Financial markets were calmer over the first quarter of 1999. Report The transmission mechanism of monetary policy. This report has been prepared by Bank of (pages 161–170) England staff under the guidance of the Monetary Policy Committee in response to suggestions by the Treasury Committee of the House of Commons and the House of Lords Select Committee on the Monetary Policy Committee of the Bank of England. Research and analysis Research work published by the Bank is intended to contribute to debate, and is not (pages 171–206) necessarily a statement of Bank policy. Monetary policy and the yield curve (by Andrew Haldane of the Bank’s International Finance Division and Vicky Read of the Bank’s Foreign Exchange Division). This article examines and interprets movements in the yield curve at the time of changes in monetary 131 Bank of England Quarterly Bulletin: May 1999 policy. These responses provide a measure of the degree of transparency and credibility of a monetary regime. There is evidence of yield-curve responses having been dampened since the introduction of inflation targeting in the United Kingdom in 1992—consistent with greater transparency and credibility of this monetary regime. The Bank’s use of survey data (by Erik Britton of the Bank’s Structural Economic Analysis Division, and Joanne Cutler and Andrew Wardlow of the Bank’s Conjunctural Assessment and Projections Division.). The Monetary Policy Committee (MPC) has access to around thirty ‘state-of-trade’ surveys, containing hundreds of different pieces of information. This article provides a brief outline of how surveys are used to inform the MPC’s economic assessment and policy decisions, describing the techniques employed to compare surveys with official data, and to extract the ‘news’ from surveys. Monetary policy and uncertainty (by Nicoletta Batini, Ben Martin and Chris Salmon of the Bank’s Monetary Assessment and Strategy Division). This article describes various types of uncertainty that policy-makers may face. It summarises analysis, including recent work by Bank staff, that shows how different forms of uncertainty could lead to different policy responses. An effective exchange rate index for the euro area (by Roy Cromb of the Bank’s Structural Economic Analysis Division). Since 11 May, the Bank of England has published a daily effective exchange rate index for the euro area. The index is calculated using close-of-business rates in London and is compiled on the basis developed and used by the International Monetary Fund. This article describes the calculation of the index since the initial value of the euro was set on 31 December 1998, and also for the preceding period. The index is calculated, using 1990 as a base year, by weighting together the individual exchange rates of the eleven euro-area countries against non euro area currencies; so it represents an effective index for the eleven countries as a group, rather than for the euro as a currency. The article compares the Bank’s euro-area index with recent movements of the euro against the US dollar, sterling, the Japanese yen and the Swiss franc; with the Bank for International Settlements (BIS) index provisionally used by the European Central Bank (ECB); and with the IMF’s ‘broad’ euro-area index, which has a greater country coverage. It also notes how the introduction of the euro has affected the exchange rate indices for individual countries. The financing of small firms in the United Kingdom (by Melanie Lund and Jane Wright of the Bank’s Domestic Finance Division). Economists have often argued that imperfections in the financing of small firms arise because of information asymmetries: the small business owner generally has much better information than the bank on his firm’s performance. This is fundamentally different from the situation with large companies. This article examines the developments over the past decade in the financing of small businesses in the United Kingdom. It notes the sector’s reduced dependence on external funds and increased use of a range of financing products. The article also assesses the current risks faced by the small firms sector and its providers of finance, suggesting that this sector is now more resilient to a downturn in the economy than in the early 1990s, thus reducing the likelihood of a recurrence of the high levels of business failures experienced in that recession. Structural changes in exchange-traded markets (by Claire Williamson of the Bank’s Market Infrastructure Division). This article outlines the main recent structural changes in exchange-traded markets—mergers between equity and derivatives exchanges, new international links between exchanges, and changes in exchanges’ ownership structure. It analyses the factors that have prompted these developments, and reviews the implications that the changes may have for market-users, other types of infrastructure and the authorities.that the changes may have for market-users, other types of infrastructure and the authorities. This summary is also available from the Bank’s web site at www.bankofengland.co.uk/summary.htm. 132 Markets and operations This article reviews developments in international and domestic financial markets in the first quarter of 1999, and describes official operations in financial markets. ● The euro was successfully launched on 4 January. ● Euro-denominated bond issuance was heavy during the first quarter. ● Economic indicators in the euro area were generally disappointing, and the euro exchange rate weakened over the quarter. After the end of the quarter on 8 April, the European Central Bank (ECB) announced a cut in interest rates of 50 basis points to 2.5%. ● Economic indicators in the United States were unexpectedly strong, and market expectations of the path of US interest rates were revised upwards, but there was no change in the official target for the federal funds rate.
Load more

Recommended publications
  • Board of Regents Academic and Student Affairs Committee 7 State of Iowa December 2, 2015
    BOARD OF REGENTS ACADEMIC AND STUDENT AFFAIRS COMMITTEE 7 STATE OF IOWA DECEMBER 2, 2015 Contact: Diana Gonzalez REQUEST TO AWARD AN HONORARY DOCTOR OF HUMANE LETTERS DEGREE AT IOWA STATE UNIVERSITY Action Requested: Consider approval of the request by Iowa State University to award an honorary Doctor of Humane Letters degree to Dame DeAnne Julius at Fall 2015 Commencement. Executive Summary: Iowa State University wishes to recognize Dame DeAnne for her many outstanding contributions and distinguished service in economics, business, international relations, government, policymaking, and academia. Details on Dame DeAnne’s Accomplishments: Dame DeAnne was born in Iowa and currently holds dual citizenship in the United States and the United Kingdom. She graduated from Ames High School in 1967 in two and a half years. In 1970, she earned a B.S. with distinction in economics from Iowa State University and an M.A. and Ph.D. in economics from the University of California at Davis. Dame DeAnne spent one year as an economic analyst for the U.S. Central Intelligence Agency before completing her advanced degrees at UC-Davis. In 1975, she began her career as a project economist with the World Bank in Washington. During the next seven years, she worked in many countries, conducting rigorous analyses of the economic feasibility of proposed investment projects and became the Bank’s senior expert in electricity generation, petroleum, and natural gas extraction and distribution. From 1986 to 1989, Dame DeAnne served as Director of the International Economics Programme at the Royal Institute of International Affairs. Also known as Chatham House, the organization is a think tank devoted to international affairs.
    [Show full text]
  • Bank of England
    Bank of England Annual Report 2001 Bank of England Annual Report 2001 Contents 3 Governor’s Foreword 6 The Court of Directors 8 Governance and Accountability 10 Organisation Overview 12 The Executive and Senior Management 14 The Bank’s Core Purposes 15 Review of Performance against Objectives and Strategy 28 Monetary Policy Committee Processes 33 Objectives and Strategy for 2001/02 34 Financial Framework for 2001/02 38 Personnel, Community Activities and Technical Assistance 43 Remuneration of Governors, Directors and MPC Members 47 Report from Members of Court 51 Risk Management 54 Report by the Non-Executive Directors 56 Report of the Independent Auditors 58 The Bank’s Financial Statements 58 Banking Department Profit and Loss Account 59 Banking Department Balance Sheet 60 Banking Department Cash Flow Statement 61 Notes to the Banking Department Financial Statements 85 Issue Department Statements of Account 86 Notes to the Issue Department Statements of Account 88 Addresses and Telephone Numbers Sir Edward George, Governor 2 Bank of England Annual Report 2001 Governor’s Foreword The past year has seen further steady progress for the UK economy as a whole. By the first 1 quarter of 2001, output was some 2 /2% higher than a year earlier, leaving the annual average rate of growth at around 3% since the recovery from recession began some nine years ago. Employment has continued to rise, to over 28 million on the latest LFS data – the highest number of people in work on record; and the rate of unemployment has continued to decline, to 3.3% on the claimant count – the lowest rate since August 1975.
    [Show full text]
  • KPMG Board Leadership Centre Global Boardroom Insights
    Calibrating risk oversight KPMG Board Leadership Centre Global Boardroom Insights Lindsay Maxsted – BHP Billiton (Australia) Maggie Wilderotter – Frontier/Xerox/Proctor & Gamble (U.S.) Artur Gabor – PKN Orlen (Poland) Dame DeAnne Julius – Roche (Switzerland) Marie Gemma Dequae – FERMA/Belfius (Belgium) Mike Nolan – KPMG’s Global Leader Risk Consulting 2 Calibrating risk oversight A Note from KPMG’s Audit Committee Institute U.S. investor Warren Buffet has said quite simply that “risk comes from not knowing what you are doing.” Of course, underlying that observation – as any board member or business leader well knows – are all the challenges, complexities, and uncertainties of running a business. For many boards and audit committees today, helping to ensure that As one director suggests, a good risk management and governance the company is headed in the right direction and taking appropriate process “can be compared to the brakes of a car. The better the risks – that the company “knows what it’s doing” – is requiring deeper brakes, the faster the car can drive.” Indeed, good brakes are essential. engagement as the business and risk environment becomes more The challenge for many businesses and boards will be to effectively link complex and faster paced. In this edition of Global Boardroom Insights, risk management with the strategy that’s driving the company forward seasoned directors and risk professionals from around the world share – and to calibrate along the way. their thoughts on how boards are strengthening their oversight of risk We hope you find this edition of Global Boardroom Insights helpful in – particularly in the context of strategy.
    [Show full text]
  • Making a Modern Central Bank
    CONSEQUENCES OF SUCCESS AND FAILURE: MAKING A MODERN CENTRAL BANK Bank of England book launch Virtual 23 November 2020 Bank of England book launch OVERVIEW A series of upheavals at the Bank of England in 1987-2003 provided the background to a monetary and economic revolution that reverberates still through global finance today. Harold James’ Making a Modern Central Bank – The Bank of England 1979-2003 examines the most turbulent period of change at the Old Lady of Threadneedle Street since its early years helping finance war with France after its foundation in 1694. The launch brings together leading figures from the UK and abroad to discuss past successes and failures which have shaped the Bank’s make-up. The session starts with a balance sheet of the Bank of England’s overall transformation, going on to discuss the impact on UK and international banking and finance. It ends by looking at the lasting legacies of changing regimes for monetary policy and banking supervision. MEETING AT A GLANCE GMT 15:00 - 15:05 Welcome address 15:05 - 15:15 Keynote address: Harold James, Professor of History, Princeton University 15:15 - 16:10 Session I: Consequences of success and failure: the making of a modern central bank 16:10 - 17:05 Session II: Development of banking and financial markets: the growth of financial globalisation 17:05 - 18:00 Session III: Balancing responsibilities: Banking supervision, monetary policy and the trials of independence 18:00 Closing remarks 2|Consequences of success and failure: Making a modern central bank MEETING PROGRAMME
    [Show full text]
  • Headed Sbe Annual Report 2016-17.Pdf
    Dean House Vernham Dean Andover, Hants SP11 0JZ Tel: +44 (0)1264737552 Fax: +44 (0)20 7900 2585 Email: [email protected] www.sbe.co.uk ANNUAL REPORT OF THE CHAIRMAN 2016-17 I am pleased to report that 2016-17 has been another year of progress for the Society of Business Economists: membership is approaching an all-time high, the Society’s finances are stable, its programme of events has never been stronger, and it is expanding the type and range of services that it provides to its members. The expansion of the Society’s membership and the improvement in its finances in recent years allow us to continue to enhance the services that we offer to current and prospective members. In the New Year, we will be launching a professional development programme for economists, to be run by the Society’s new Head of Professional Development, Andy Ross. In addition, over the past year, we have employed Dr Rebecca Harding as a Senior Consultant, to help grow both membership of the Society and the range of services that it provides. The Society could not survive without the hard work and dedication of its Council. I am particularly indebted to Sandra Curtis, the Society’s Honorary Secretary, for her dedication. Also, to Dame Kate Barker DBE, who chairs the Society’s Membership Committee and is a former Chairman of the Society; George Buckley, the Vice Chairman of the Society and the incoming chair of the Membership Committee; James Lambert and Andrew Milligan OBE, who co-chair the Society’s Finance and Investment Committee; Ian Harwood, who chairs the SBE’s Professional Development Committee; Sunil Krishnan, who chairs the Website and Social Media committee; Amanda Rowlatt, who spearheaded the joint SBE/GES programme; and to Adrian Majumdar, Stephen Meredith and Ian Mulheirn, who all joined Council at the end of 2016.
    [Show full text]
  • Impact Report 2020-21
    Impact repor t 2020–21 t Our global impact Our global world-leading reach independent Secondresearch level foliois a if vitalneeded resource for leaders and policymakers around the world United States of America Analysing US foreign policy priorities, including transitions, trends and prospects for international Latin America cooperation under the and the Caribbean Biden administration Promoting greater in areas such awareness of as trade, global developments governance and security. in the region and an inclusive circular economy, and a green recovery globally. Brazil Finding innovative solutions to tackle climate change, including better ways to manage land use, forests and food production in South America and around the world. t United Kingdom Belarus Improving population Working with civil society health post COVID-19, and the international focusing on health systems, community to provide supply chains and societal recommendations health equalities in for democracy, good Europe and globally. governance and human rights protections. China Exploring cooperation and competition, including transatlantic and Indo-Pacific responses to China’s domestic and foreign policies, Middle East and and their impacts on North Africa region regional geopolitics. Setting out a roadmap for regional stability and security, including work on political movements and transitions in Iraq, Libya, Syria and Iran. Indonesia Strengthening Nigeria cybersecurity Supporting architecture to make individuals, the internet a safer organizations and space for governments public officials to and societies globally, tackle corruption. including in the ASEAN region – #cyberspace4all. Chatham House, the Royal Institute of International Affairs, is a world-leading policy institute based in London. Our mission is to help governments and societies build a sustainably secure, prosperous and just world.
    [Show full text]
  • Inflation Report
    Inflation Report May 2000 The Inflation Report is produced quarterly by Bank staff under the guidance of the members of the Monetary Policy Committee. It serves two purposes. First, its preparation provides a comprehensive and forward-looking framework for discussion among MPC members as an aid to our decision making. Second, its publication allows us to share our thinking and explain the reasons for our decisions to those whom they affect. Although not every member will agree with every assumption on which our projections are based, the fan charts represent the MPC’s best collective judgment about the most likely path for inflation and output, and the uncertainties surrounding those central projections. This Report has been prepared and published by the Bank of England in accordance with section 18 of the Bank of England Act 1998. The Monetary Policy Committee: Eddie George, Governor Mervyn King, Deputy Governor responsible for monetary policy David Clementi, Deputy Governor responsible for financial stability Willem Buiter Charles Goodhart DeAnne Julius Ian Plenderleith John Vickers Sushil Wadhwani The Overview of this Inflation Report is available on the Bank’s web site: www.bankofengland.co.uk/inflationreport/infrep.htm The entire Report is available in PDF format on www.bankofengland.co.uk/inflationreport/index.htm Printed by Park Communications Ltd © Bank of England 2000 ISBN 1 85730 167 6 ISSN 1353–6737 Overview In the first quarter of 2000, output in the UK economy was 2.9% higher than a year earlier, and inflation on the RPIX measure was 2.0% in March. Final domestic demand, led by household consumption, grew strongly last year.
    [Show full text]
  • How Robust Is the New Conventional Wisdom in Monetary Policy?
    How Robust is the New Conventional Wisdom in Monetary Policy? The surprising fragility of the theoretical foundations of inflation * ** targeting and central bank independence Willem H. Buiter, Professor of European Political Economy European Institute London School of Economics and Political Science, Universiteit van Amsterdam, NBER and CEPR April 15, 2007 * Paper to be presented at the Bank of England’s Chief Economists' Workshop, 16-18 April 2007. An earlier version of this paper was presented at the 2006 Central Bank Governors’ Symposium “Challenges to Monetary Theory”, at the Bank of England on June23, 2006. Earlier versions of this paper were presented at the Norges Bank’s Conference on Monetary Policy 2006, Evaluating Monetary Policy, 30 March 2006, and at the 37rd Konstanz Seminar on Monetary Theory and Policy, May 30 - June 2. 2006. I would like to thank Gianluca Benigno, Pierpoalo Benigno, Jarle Bergo, Mario Blejer, Guillermo Calvo, Stephen Cecchetti, Vittorio Corbo, Lawrence Christiano, Casper de Vries, Stefan Gerlach, Svein Gjedrem, Kjersti Haugland, Rachel Lomax, Manfred Neumann, Jorunn Paulson, Huw Pill, Robert Rasche, Martin Redrado, Irma Rosenberg, Michael Saunders, Anne Sibert, Zdenek Tuma, Jurgen von Hagen, Axel Weber and Fredrik Wulfsberg for helpful comments. Alan Blinder offered wide-ranging and insightful comments on an earlier version of the paper, and I am greatly in his debt. None of the aforementioned bear any responsibility for the content of this paper. ** © Willem H. Buiter 2006, 2007. Abstract Flexible inflation targeting - the minimisation of the expected discounted sum of current and future period losses, with the period loss function given by the weighted sum of squared deviations of inflation from a constant target rate and the squared output gap - cannot be rationalised, except in a single, practically uninteresting special case, using conventional welfare economic criteria.
    [Show full text]
  • London Publishing Partnership
    London Publishing Partnership Trade is being weaponized – and this isn’t good. As politicians on both sides of the Atlantic raise the stakes, trade is increasingly a tool of coercion to achieve strategic influence. This book looks at the risks for us all as trade becomes an instrument of foreign policy, and shows how politicians could turn things around. Although trade, wars and foreign policy have been interwoven throughout history, the belligerence of the language today means trade is becoming predominantly political and strategic, rather than economic. Politicians have resorted to economic nationalism, using the rhetoric of conflict to recapture the lost territory of global leadership and to win the hearts and minds of their ‘populist’ electorates. The authors of this book explain why this is, why it is so dangerous and also present new data on unseen trade in arms and dual-use goods. These are used to fight proxy wars, wreaking havoc with beneficial trade and increasing migration, which in turn further fuels the fear and the febrile atmosphere at home. They present policy recommendations for reversing these trends: increasing trade finance, promoting the benefits of globalization and controlling the export of weapons. We are at an historical juncture as globalization itself is called into question. The political, economic and technological progress of the last 30 years is under threat. Unless governments retreat from their current rhetoric, the scope for mistrust and retaliation will grow. There will be no winners. “A new sort of trade negotiations are about to dominate the political agenda of the major powers. At a time when the Trans-Pacific Partnership and the North American Free Trade Agreement are being revisited and Brexit is being negotiated, this book shows how the economic benefits of trade are being tied to countries‘ strategic foreign policy objectives, leading to win– lose bargaining and greater international tensions.
    [Show full text]
  • Monetary Policy Committee
    RESEARCH PAPER 99/17 The Monetary Policy 18 FEBRUARY 1999 Committee: theory & performance. This Paper looks at the history of the first year and a half of the Monetary Policy Committee. It examines the reasons given for its establishment, describes its actions and assesses its impact. Timothy Edmonds ECONOMIC POLICY & STATISTICS SECTION HOUSE OF COMMONS LIBRARY Recent Library Research Papers include: 99/2 Unemployment by Constituency - December 1998 13.01.99 99/3 Tax Credits Bill Bill 9 of 1998-9 18.01.99 99/4 The Sexual Offences (Amendment) Bill: 'Age of consent' and abuse of a 21.01.99 position of trust [Bill 10 of 1998-99] 99/5 The House of Lords Bill: 'Stage One' Issues Bill 34 of 1998-99 28.01.99 99/6 The House of Lords Bill: Options for 'Stage Two' Bill 34 of 1998-99 28.01.99 99/7 The House of Lords Bill: Lords reform and wider constitutional reform 28.01.99 Bill 34 of 1998-99 99/8 Economic Indicators 01.02.99 99/9 Local Government Finance Settlement: 1999/00: England 02.02.99 99/10 Treatment of Acid Mine Drainage 02.02.99 99/11 Employment Relations Bill 1998-99 Bill 36 05.02.99 99/12 Social Security Contributions (Transfer of Functions, Etc.) Bill [HL] 05.02.99 Bill 38 of 1998-99 99/13 Iraq: "Desert Fox" and Policy Developments 10.02.99 99/14 The Asian Economic Crisis 11.02.99 99/15 Unemployment by Constituency - January 1999 17.02.99 99/16 Immigration and Asylum (forthcoming) Research Papers are available as PDF files: • to members of the general public on the Parliamentary web site, URL: http://www.parliament.uk • within Parliament to users of the Parliamentary Intranet, URL: http://hcl1.hclibrary.parliament.uk Library Research Papers are compiled for the benefit of Members of Parliament and their personal staff.
    [Show full text]
  • Annual Review 2018/19 V
    Annual Review 2018/19 V Chatham House, the Royal Institute of International Affairs, is a world-leading policy institute based in London. Our mission is to help governments and societies build a sustainably secure, prosperous and just world. V Chatham House Annual Review 2018/19 Contents Introduction 02 Chair’s statement 03 Director’s statement About us 04 Mission, governance and membership 06 Responding to the changed context 08 Reaching out to new audiences 10 Informed debate 12 Supporting the next generation of leaders Delivering our mission 14 Charting a course for stability in globally uncertain times 20 New thinking on how societies can promote prosperity 26 Contributing to a more just and equitable society 32 Honorary Treasurer’s report 34 Financial headlines 36 Governance, staff, funding and members Chatham house annual Review 2018/19 Chair’s statement Research and ideas that have impact, and reaching new diverse, global audiences, are priorities for the institute. I was delighted to be elected chair of Chatham Honorary Treasurer’s report (page 32), 2018/19 House last year. It is an honour to lead such was a challenging year financially, with income a remarkable institution and to have the totalling £16,381,000, slightly below the opportunity to build on the legacy left by Stuart level recorded in 2017/18. Although total Popham, who stepped down last year as chair net assets at 31 March 2019 were 3 per cent and whom I thank and pay tribute to. down year on year, the balance sheet remains My ambition is to ensure that the institute strong and there was an inflow of cash, with has an even better future than its illustrious the level of forward income received and past.
    [Show full text]
  • Must the Growth Rate Decline? Baumol's Unbalanced Growth Revisited
    Must the growth rate decline? Baumol’s unbalanced growth revisited Nicholas Oulton Bank of England, Threadneedle Street, London, EC2R 8AH. The views expressed are those of the author, not necessarily those of the Bank of England. I should like to thank without implicating William Baumol, Alec Chrystal, Roy Cromb, Andrew Gurney, DeAnne Julius, Stephen Redding, Paul Stoneman, John Vickers, an anonymous referee and other colleagues at the Bank of England for helpful comments and suggestions. Issued by the Bank of England, London, EC2R 8AH, to which requests for individual copies should be addressed: envelopes should be marked for the attention of Publications Group. (Telephone 020 7601 4030). Working papers are also available on the Bank’s Internet site at http://www.bankofengland.co.uk/wplist.htm. Bank of England 1999 ISSN 1368-5562 Contents Abstract 5 1 Introduction 7 1.1 The stagnationist argument and some facts about services 7 1.2 The plan of the paper 12 1.3 An intuitive argument 13 2 The stagnationist argument 15 2.1 The Baumol model when all goods are final 15 2.2 Relative prices and input shares 18 3 The stagnationist argument when some products are intermediate 21 3.1 A value-added model of productivity growth 21 3.2 Two concepts of sectoral TFP growth 23 4 A simple model of endogenous structural change 28 4.1 The model 28 4.2 Discussion 32 5 TFP growth in the United Kingdom: a sectoral analysis 34 5.1 Quantifying the contributions of each sector 34 5.2 The effects of structural change in the United Kingdom and the United States 36 5.3 The effect of measurement error 39 5.4 Outsourcing and the relabelling of economic activities 41 6 Conclusion 42 References 44 Appendix A: Biased technical progress 47 Appendix B: The measurement of real value-added 50 3 Abstract According to Baumol’s model of unbalanced growth, if resources are shifting towards industries where productivity is growing relatively slowly, the aggregate productivity growth rate will slow down.
    [Show full text]