Reaction Functions of Bank of England MPC Members: Insiders versus Outsiders
AbstractIn 1997, the Bank of England was granted operational responsibility for setting interest rates to meet a Government inflation target of RPIX 2.5 percent. As part of the shift towards independence, operational decisions on monetary policy were delegated to a Monetary Policy Committee. Using voting data obtained from Minutes of Monetary Policy Committee Meetings, I show that as a group, internally appointed MPC members (insiders) on average prefer higher interest rates than external appointees (outsiders). Further, ordered logit analysis demonstrates that insiders and outsiders are motivated by different concerns when setting interest rates, with the interest rate setting behaviour of outsiders being less easy to predict than those of insiders.
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Bibliographic InfoPaper provided by School of Economics, University of Surrey in its series School of Economics Discussion Papers with number 0606.
Length: 45 pages
Date of creation: Mar 2006
Date of revision:
Monetary Policy Committee; insiders; outsiders; voting;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-01 (All new papers)
- NEP-CBA-2006-04-01 (Central Banking)
- NEP-DCM-2006-04-01 (Discrete Choice Models)
- NEP-MAC-2006-04-01 (Macroeconomics)
- NEP-MON-2006-04-01 (Monetary Economics)
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