Insiders versus Outsiders in Monetary Policy-Making
AbstractThis paper looks at the voting patterns of internal and external members of the MPC to investigate how far there are differences between insiders and outsiders. We make three contributions. First, we assess the extent to which the Bank of England internally generated forecasts explain the MPC members' voting decisions. This is important as generating forecasts on a quarterly basis is a key part of the process used by the Bank of England. The forecast for inflation is made public in the Inflation Report while the output gap forecast is not. Second, we use a random coefficient method of estimation in which the parameters of the interest rate rule are allowed, but not required, to be different across members. Third, we find evidence of some heterogeneity in the intercept, a measure of experience on the MPC and the interest rate smoothing parameter, but no significant differences in the members' reaction to the forecasts of inflation and the output gap.
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Bibliographic InfoPaper provided by Monetary Policy Committee Unit, Bank of England in its series Discussion Papers with number 20.
Length: 13 pages
Date of creation: Dec 2007
Date of revision:
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Web page: http://www.bankofengland.co.uk/publications/externalmpcpapers/index.htm
More information through EDIRC
Monetary Policy; Voting Patterns;
Other versions of this item:
- Timothy Besley & Neil Meads & Paolo Surico, 2008. "Insiders versus Outsiders in Monetary Policymaking," American Economic Review, American Economic Association, vol. 98(2), pages 218-23, May.
- Timothy Besley & Neil Meads & Paolo Surico, 2008. "Insiders versus outsiders in monetary policymaking," LSE Research Online Documents on Economics 33743, London School of Economics and Political Science, LSE Library.
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-31 (All new papers)
- NEP-CBA-2008-05-31 (Central Banking)
- NEP-MAC-2008-05-31 (Macroeconomics)
- NEP-MON-2008-05-31 (Monetary Economics)
- NEP-POL-2008-05-31 (Positive Political Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stephen Hansen & Michael F. McMahon, 2008.
"Delayed Doves: MPC Voting Behaviour of Externals,"
CEP Discussion Papers
dp0862, Centre for Economic Performance, LSE.
- Christopher Spencer, 2006. "The Dissent Voting Behaviour of Bank of England MPC Members," School of Economics Discussion Papers 0306, School of Economics, University of Surrey.
- Alessandro Riboni & Francisco Ruge-Murcia, 2007.
"Preference heterogeneity in monetary policy committees,"
DNB Working Papers
157, Netherlands Central Bank, Research Department.
- Alessandro Riboni & Francisco J. Ruge-Murcia, 2008. "Preference Heterogeneity in Monetary Policy Committees," International Journal of Central Banking, International Journal of Central Banking, vol. 4(1), pages 213-233, March.
- RIBONI, Alessandro & RUGE-MURCIA, Francisco J., 2007. "Preference Heterogeneity in Monetary Policy Committees," Cahiers de recherche 05-2007, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- RIBONI, Alessandro & RUGE-MURCIA, Francisco J., 2007. "Preference Heterogeneity in Monetary Policy Committees," Cahiers de recherche 2007-05, Universite de Montreal, Departement de sciences economiques.
- Riboni, Alessandro & Ruge-Murcia, Francesco, 2008. "Preference Heterogeneity in Monetary Policy Committees," Economics Papers from University Paris Dauphine 123456789/7717, Paris Dauphine University.
- Simon Hix & Bjorn Hoyland & Nick Vivyan, 2007. "From doves to hawks: a spatial analysis of voting in the Monetary Policy Committee of the Bank of England, 1997-2007," LSE Research Online Documents on Economics 25199, London School of Economics and Political Science, LSE Library.
- Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
- Christopher Spencer, 2006. "Reaction Functions of Bank of England MPC Members: Insiders versus Outsiders," School of Economics Discussion Papers 0606, School of Economics, University of Surrey.
- Groth, Charlotta & Wheeler, Tracy, 2008. "The behaviour of the MPC: Gradualism, inaction and individual voting patterns," Discussion Papers 21, Monetary Policy Committee Unit, Bank of England.
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