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Whither now?

Author

Listed:
  • C.A.E. GOODHART

    (London School of Economics)

Abstract

The author is one of the UK's eminent monetary economists and a member of the UK's Monetary Policy Committee. After summarising his early academic career, he discusses his time at the Bank of England and the formation of UK monetary policy. This leads on to a survey of his later experiences in returning to academia and his analysis of foreign exchange markets and central bank autonomy. The movements of foreign exchange markets have been thought to react upon the arrival of news concerning changes in monetary policy. However, close examination of the US forex market does not show any significant fluctuations in reaction to particular news disclosures. Economic news with pre-announced release dates have been proven to produce jumps in volatility within minutes of disclosure. The use of high frequency data at given intervals has been shown to produce price spikes and subsidence after a few minutes.

Suggested Citation

  • C.A.E. Goodhart, 1997. "Whither now?," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 50(203), pages 385-430.
  • Handle: RePEc:psl:bnlqrr:1997:41
    as

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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/10583/10467
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    References listed on IDEAS

    as
    1. Jeffrey A. Frankel & Giampaolo Galli & Alberto Giovannini, 1996. "Introduction to "The Microstructure of Foreign Exchange Markets"," NBER Chapters,in: The Microstructure of Foreign Exchange Markets, pages 1-18 National Bureau of Economic Research, Inc.
    2. Svensson, Lars E. O., 1997. "Inflation forecast targeting: Implementing and monitoring inflation targets," European Economic Review, Elsevier, vol. 41(6), pages 1111-1146, June.
    3. Svensson, Lars E O, 1997. "Optimal Inflation Targets, "Conservative" Central Banks, and Linear Inflation Contracts," American Economic Review, American Economic Association, vol. 87(1), pages 98-114, March.
    4. Goodhart, Charles A. E. & Payne, Richard G., 1996. "Microstructural dynamics in a foreign exchange electronic broking system," Journal of International Money and Finance, Elsevier, vol. 15(6), pages 829-852, December.
    5. Goodhart, Charles A. E. & McMahon, Patrick C. & Ngama, Yerima L., 1993. "Testing for unit roots with very high frequency spot exchange rate data," Journal of Macroeconomics, Elsevier, vol. 15(3), pages 423-438.
    6. Goodhart, Charles A E & McMahon, Patrick C & Ngama, Yerima L, 1997. "Why Does the Spot-Forward Discount Fail to Predict Changes in Future Spot Rates," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 2(2), pages 121-129, April.
    7. Riccardo Curcio & Charles Goodhart, 1991. "The Clustering of Bid/Ask Prices and the Spread in the Foreign Exchange Market," FMG Discussion Papers dp110, Financial Markets Group.
    8. Goodhart, C A E & Giugale, M, 1993. "From Hour to Hour in the Foreign Exchange Market," The Manchester School of Economic & Social Studies, University of Manchester, vol. 61(1), pages 1-34, March.
    9. Jeffrey A. Frankel & Giampaolo Galli & Alberto Giovannini, 1996. "The Microstructure of Foreign Exchange Markets," NBER Books, National Bureau of Economic Research, Inc, number fran96-1.
    10. Curcio, Riccardo, et al, 1997. "Do Technical Trading Rules Generate Profits? Conclusions from the Intra-day Foreign Exchange Market," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 2(4), pages 267-280, October.
    11. Goodhart, Charles A E & McMahon, Patrick C & Ngama, Yerima Lawan, 1992. "Does the Forward Premium/Discount Help to Predict the Future Change in the Exchange Rate?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 39(2), pages 129-140, May.
    12. Harcourt,G. C., 1972. "Some Cambridge Controversies in the Theory of Capital," Cambridge Books, Cambridge University Press, number 9780521096720.
    13. Goodhart, Charles A E & Taylor, Mark P, 1992. "Why Don't Individuals Speculate in the Forward Foreign Exchange Market?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 39(1), pages 1-13, February.
    14. Goodhart, Charles A. E. & Hesse, Thomas, 1993. "Central Bank Forex internvention assessed in continous time," Journal of International Money and Finance, Elsevier, vol. 12(4), pages 368-389, August.
    15. Stephen M. Goldfeld, 1973. "The Demand for Money Revisited," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(3), pages 577-646.
    16. Goodhart, Charles, 1988. "The Foreign Exchange Market: A Random Walk with a Dragging Anchor," Economica, London School of Economics and Political Science, vol. 55(220), pages 437-460, November.
    17. Richard Payne, 1996. "Announcement Effects and Seasonality in the Intra-day Foreign Exchange Market," FMG Discussion Papers dp238, Financial Markets Group.
    18. Walsh, Carl E, 1995. "Optimal Contracts for Central Bankers," American Economic Review, American Economic Association, vol. 85(1), pages 150-167, March.
    19. Goodhart, C. A. E. & Figliuoli, L., 1991. "Every minute counts in financial markets," Journal of International Money and Finance, Elsevier, vol. 10(1), pages 23-52, March.
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    Citations

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    Cited by:

    1. Edward Nelson, 2000. "UK monetary policy 1972-97: a guide using Taylor rules," Bank of England working papers 120, Bank of England.
    2. Nelson, Edward & Nikolov, Kalin, 2004. "Monetary Policy and Stagflation in the UK," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 293-318, June.
    3. Michael D. Bordo & Anna J. Schwartz, 2003. "Charles Goodhart's contributions to the history of monetary institutions," Chapters,in: Monetary History, Exchange Rates and Financial Markets, chapter 2 Edward Elgar Publishing.
    4. Nelson, Edward, 2001. "What Does the UK's Monetary Policy and Inflation Experience Tell Us About the Transmission Mechanism?," CEPR Discussion Papers 3047, C.E.P.R. Discussion Papers.
    5. Fratianni, Michele & von Hagen, Jurgen, 2001. "The Konstanz Seminar on monetary theory and policy at 30," European Journal of Political Economy, Elsevier, vol. 17(3), pages 641-664, September.

    More about this item

    Keywords

    Market fluctuations; Economic news; Volatility; Foreign exchange markets;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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