IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/25199.html
   My bibliography  Save this paper

From doves to hawks: a spatial analysis of voting in the Monetary Policy Committee of the Bank of England, 1997-2007

Author

Listed:
  • Hix, Simon
  • Hoyland, Bjorn
  • Vivyan, Nick

Abstract

This paper examines the making of UK monetary policy between 1997 and 2007 using an analysis of voting behaviour in the Bank of England’s Monetary Policy Committee (MPC). We use a Bayesian method to estimate the interest rate policy preferences of the MPC members on a ‘dove-hawk’ scale. Then, by comparing the ‘ideal points’ of outgoing members with their successors, we find evidence that MPC composition complements the fiscal policies pursued by the government. The revealed preferences of the MPC members suggest three distinct groups; ‘the doves’, who favour lower interest rates than the median committee member; ‘the centrists’, whose revealed preferences are in line with the median committee member; and ‘the hawks’, who favour higher interest rates than the median committee member. Our analysis suggests that the ‘opposition’ to the centrist group changes from the doves to the hawks as the spending policies of the government ceased to be constrained by the 1997 electoral promise to maintain conservative spending plans.

Suggested Citation

  • Hix, Simon & Hoyland, Bjorn & Vivyan, Nick, 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.
    • Handle: RePEc:ehl:lserod:25199
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/25199/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chang,Kelly H., 2003. "Appointing Central Bankers," Cambridge Books, Cambridge University Press, number 9780521823333, October.
    2. Meade, Ellen E & Sheets, D Nathan, 2005. "Regional Influences on FOMC Voting Patterns," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(4), pages 661-677, August.
    3. Blinder, Alan S., 2007. "Monetary policy by committee: Why and how?," European Journal of Political Economy, Elsevier, vol. 23(1), pages 106-123, March.
    4. Western, Bruce & Jackman, Simon, 1994. "Bayesian Inference for Comparative Research," American Political Science Review, Cambridge University Press, vol. 88(2), pages 412-423, June.
    5. Jackman, Simon, 2001. "Multidimensional Analysis of Roll Call Data via Bayesian Simulation: Identification, Estimation, Inference, and Model Checking," Political Analysis, Cambridge University Press, vol. 9(3), pages 227-241, January.
    6. 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.
    7. Jackman, Simon, 2000. "Estimation and Inference Are Missing Data Problems: Unifying Social Science Statistics via Bayesian Simulation," Political Analysis, Cambridge University Press, vol. 8(4), pages 307-332, July.
    8. William D. Nordhaus, 1975. "The Political Business Cycle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(2), pages 169-190.
    9. Henry W. Chappell, Jr. & Rob Roy McGregor & Todd A. Vermilyea, 2005. "Committee Decisions on Monetary Policy: Evidence from Historical Records of the Federal Open Market Committee," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262033305, April.
    10. Lewis, Jeffrey B. & Poole, Keith T., 2004. "Measuring Bias and Uncertainty in Ideal Point Estimates via the Parametric Bootstrap," Political Analysis, Cambridge University Press, vol. 12(2), pages 105-127, April.
    11. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
    12. Bafumi, Joseph & Gelman, Andrew & Park, David K. & Kaplan, Noah, 2005. "Practical Issues in Implementing and Understanding Bayesian Ideal Point Estimation," Political Analysis, Cambridge University Press, vol. 13(2), pages 171-187, April.
    13. Gerlach-Kristen, Petra, 2006. "Monetary policy committees and interest rate setting," European Economic Review, Elsevier, vol. 50(2), pages 487-507, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arnab Bhattacharjee & Sean Holly, 2010. "Rational Partisan Theory, Uncertainty, And Spatial Voting: Evidence For The Bank Of England'S Mpc," Economics and Politics, Wiley Blackwell, vol. 22(2), pages 151-179, July.
    2. Timothy Besley & Neil Meads & Paolo Surico, 2008. "Insiders versus Outsiders in Monetary Policymaking," American Economic Review, American Economic Association, vol. 98(2), pages 218-223, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Berk, Jan Marc & Bierut, Beata K., 2011. "Communication in a monetary policy committee," European Journal of Political Economy, Elsevier, vol. 27(4), pages 791-801.
    2. Alessandro Riboni & Francisco J. Ruge-Murcia, 2008. "The Dynamic (In)Efficiency of Monetary Policy by Committee," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(5), pages 1001-1032, August.
    3. Jan Marc Berk & Beata K. Bierut, 2010. "Monetary Policy Committees: Meetings And Outcomes," Contemporary Economic Policy, Western Economic Association International, vol. 28(4), pages 569-588, October.
    4. Hahn, Volker, 2016. "Designing monetary policy committees," Journal of Economic Dynamics and Control, Elsevier, vol. 65(C), pages 47-67.
    5. Richard F. Potthoff, 2018. "Estimating Ideal Points from Roll-Call Data: Explore Principal Components Analysis, Especially for More Than One Dimension?," Social Sciences, MDPI, vol. 7(1), pages 1-27, January.
    6. Christopher Hare & Keith T. Poole, 2015. "Measuring ideology in Congress," Chapters, in: Jac C. Heckelman & Nicholas R. Miller (ed.), Handbook of Social Choice and Voting, chapter 18, pages 327-346, Edward Elgar Publishing.
    7. Yoshiharu Oritani, 2010. "Public governance of central banks: an approach from new institutional economics," BIS Working Papers 299, Bank for International Settlements.
    8. Etienne Farvaque & Norimichi Matsueda & Pierre-Guillaume Méon, 2007. "How committees reduce the volatility of policy rates," DULBEA Working Papers 07-11.RS, ULB -- Universite Libre de Bruxelles.
    9. 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.
    10. Masciandaro, Donato, 2022. "Independence, conservatism, and beyond: Monetary policy, central bank governance and central banker preferences (1981–2021)," Journal of International Money and Finance, Elsevier, vol. 122(C).
    11. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 910-945, December.
    12. Mikael Apel & Carl Andreas Claussen & Petra Gerlach-Kristen & Petra Lennartsdotter & Øistein Røisland, 2013. "Monetary policy decisions – comparing theory and “inside” information from MPC members," Working Paper 2013/03, Norges Bank.
    13. Farvaque, Etienne & Matsueda, Norimichi & Méon, Pierre-Guillaume, 2009. "How monetary policy committees impact the volatility of policy rates," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 534-546, December.
    14. Jeong-Hun Han, 2007. "Analysing Roll Calls of the European Parliament," European Union Politics, , vol. 8(4), pages 479-507, December.
    15. Riboni, Alessandro & Ruge-Murcia, Francisco, 2014. "Dissent in monetary policy decisions," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 137-154.
    16. Jung, Alexander & Kiss, Gergely, 2012. "Preference heterogeneity in the CEE inflation-targeting countries," European Journal of Political Economy, Elsevier, vol. 28(4), pages 445-460.
    17. Helge Berger, 2006. "Optimal central bank design: Benchmarks for the ECB," The Review of International Organizations, Springer, vol. 1(3), pages 207-235, September.
    18. Hansen, Stephen & McMahon, Michael & Velasco Rivera, Carlos, 2014. "Preferences or private assessments on a monetary policy committee?," Journal of Monetary Economics, Elsevier, vol. 67(C), pages 16-32.
    19. Mark Harris & Paul Levine & Christopher Spencer, 2011. "A decade of dissent: explaining the dissent voting behavior of Bank of England MPC members," Public Choice, Springer, vol. 146(3), pages 413-442, March.
    20. Lähner, Tom, 2015. "Inconsistent voting behavior in the FOMC," Hannover Economic Papers (HEP) dp-546, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.

    More about this item

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:25199. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.