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

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  • Matthias Neuenkirch

    ()
    (University of Aachen)

  • Pierre Siklos

    (Wilfried Laurier University)

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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File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/31-2011_neuenkirch.pdf
File Function: Fourth version, 2011
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Bibliographic Info

Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201131.

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Length: 29 pages
Date of creation: 2011
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:201131

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

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