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Base Money Rules in the United Kingdom


  • Haldane, Andrew G
  • McCallum, Bennett T
  • Salmon, Chris


The authors conduct counterfactual stochastic simulations of B. T. McCallum's monetary policy rule for the United Kingdom. This rule targets nominal GDP using the monetary base as its instrument. It is able to secure a dramatic improvement in inflation performance compared with historical outturns, at the same time imposing few countervailing costs, measured in terms of output or instrument instability. An example is given of how the rule might be used at an operational level in the setting of U.K. monetary policy. Copyright 1996 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Haldane, Andrew G & McCallum, Bennett T & Salmon, Chris, 1996. "Base Money Rules in the United Kingdom," The Manchester School of Economic & Social Studies, University of Manchester, vol. 64(0), pages 1-27, Suppl..
  • Handle: RePEc:bla:manch2:v:64:y:1996:i:0:p:1-27

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    References listed on IDEAS

    1. Robertson, D & Symons, J, 1994. "Five Weeks in the Life of the Pound. Interest Rates, Expectations and Sterling's Exit from the ERM," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(1), pages 1-12, February.
    2. Levin, Eric J & Copeland, Laurence S, 1993. "Reading the Message from the U.K. Indexed Bond Market: Real Interest Rates, Expected Inflation and the Risk Premium," The Manchester School of Economic & Social Studies, University of Manchester, vol. 61(0), pages 13-34, Suppl..
    3. Woodward, G Thomas, 1990. "The Real Thing: A Dynamic Profile of the Term Structure of Real Interest Rates and Inflation Expectations in the United Kingdom, 1982-89," The Journal of Business, University of Chicago Press, vol. 63(3), pages 373-398, July.
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    Cited by:

    1. Beenstock, Michael & Azoulay, Eddy & Offenbacher, Akiva & Sulla, Olga, 2003. "A macroeconometric model with oligopolistic banks: monetary control, inflation and growth in Israel," Economic Modelling, Elsevier, vol. 20(3), pages 455-486, May.
    2. Simon Hall & Chris Salmon & Tony Yates & Nicoletta Batini, 1999. "Uncertainty and Simple Monetary Policy Rules - An illustration for the United Kingdom," Bank of England working papers 96, Bank of England.

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