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What's in a Second Opinion? Shadowing the ECB and the Bank of England

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  • Matthias Neuenkirch
  • Pierre L. Siklos

Abstract

One way of evaluating how well monetary authorities perform is to provide the public with a regular and independent second opinion. The European Central Bank (ECB) and the Bank of England (BoE) are shadowed by professional and academic economists who provide a separate policy rate recommendation in advance of the central bank announcement. In this paper, we systematically evaluate this second opinion and find that, first, the shadow committee of the ECB tends to be relatively less inflation averse than the ECB. In contrast, the shadow committee of the BoE proposes a more hawkish monetary policy stance than the BoE. Second, consensus within a shadow committee is far easier to reach when there is no pressure to change the policy rate. Third, the ECB’s shadow committee is more activist than the ECB’s Governing Council and a larger degree of consensus within the former brings about a greater likelihood that the two committees will agree.

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Bibliographic Info

Paper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2013-46.

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Length: 28 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:een:camaaa:2013-46

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Keywords: Committee Behavior; Monetary Policy Committees; Shadow Councils; Taylor Rules;

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Cited by:
  1. Pierre L. Siklos & Matthias Neuenkirch, 2014. "How Monetary Policy is made: Two Canadian Tales," CAMA Working Papers, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University 2014-53, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

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