IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/33743.html
   My bibliography  Save this paper

Insiders versus outsiders in monetary policymaking

Author

Listed:
  • Besley, Timothy
  • Meads, Neil
  • Surico, Paolo

Abstract

This 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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Besley, Timothy & Meads, Neil & Surico, Paolo, 2008. "Insiders versus outsiders in monetary policymaking," LSE Research Online Documents on Economics 33743, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:33743
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/33743/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Christiano, Lawrence J. & Eichenbaum, Martin & Evans, Charles L., 1999. "Monetary policy shocks: What have we learned and to what end?," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 2, pages 65-148, Elsevier.
    3. Hansen, Stephen & McMahon, Michael, 2008. "Delayed doves: MPC voting behaviour of externals," LSE Research Online Documents on Economics 19611, London School of Economics and Political Science, LSE Library.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    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.
    Full references (including those not matched with items on IDEAS)

    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. Jan Marc Berk & Beata Bierut & Ellen E. Meade, 2010. "The Dynamic Voting Patterns of the Bank of England's MPC," Working Papers 2010-17, American University, Department of Economics.
    2. 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.
    3. Paolo Balduzzi & Clara Graziano & Annalisa Luporini, 2014. "Voting in small committees," Journal of Economics, Springer, vol. 111(1), pages 69-95, February.
    4. 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.
    5. repec:hal:spmain:info:hdl:2441/5srl83htc08lnqmtptsrb72rt9 is not listed on IDEAS
    6. 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.
    7. Mikael Apel & Carl Andreas Claussen & Petra Lennartsdotter & Øistein Røisland, 2015. "Monetary Policy Committees: Comparing Theory and "Inside" Information from MPC Members," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 47-89, December.
    8. Sami Alpanda & Adam Honig, 2009. "The Impact of Central Bank Independence on Political Monetary Cycles in Advanced and Developing Nations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(7), pages 1365-1389, October.
    9. repec:spo:wpmain:info:hdl:2441/5srl83htc08lnqmtptsrb72rt9 is not listed on IDEAS
    10. Hansen, Stephen & McMahon, Michael, 2008. "Delayed doves: MPC voting behaviour of externals," LSE Research Online Documents on Economics 19611, London School of Economics and Political Science, LSE Library.
    11. Jérôme Creel & Mehdi El Herradi, 2019. "Shocking aspects of monetary policy on income inequality in the euro area," Working Papers hal-03403233, HAL.
    12. 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.
    13. Kilman, Josefin, 2020. "Monetary Policy and Income Inequality in the United States: The Role of Labor Unions," Working Papers 2020:10, Lund University, Department of Economics, revised 20 Sep 2022.
    14. Jérôme Creel & Mehdi El Herradi, 2024. "Income inequality and monetary policy in the euro area," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 332-355, January.
    15. Federico Favaretto & Donato Masciandaro, 2016. "Too Little, Too Late? Monetary Policymaking Inertia and Psychology: A Behavioral Model," BAFFI CAREFIN Working Papers 1617, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    16. 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.
    17. Leonardo Gambacorta & Boris Hofmann & Gert Peersman, 2014. "The Effectiveness of Unconventional Monetary Policy at the Zero Lower Bound: A Cross‐Country Analysis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(4), pages 615-642, June.
    18. 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.
    19. John C. Bluedorn & Christopher Bowdler & Christoffer Koch, 2017. "Heterogeneous Bank Lending Responses to Monetary Policy: New Evidence from a Real-Time Identification," International Journal of Central Banking, International Journal of Central Banking, vol. 13(1), pages 95-149, February.
    20. Roman Horváth & Katerina Šmídková & Jan Zápal, 2012. "Central Banks' Voting Records and Future Policy," International Journal of Central Banking, International Journal of Central Banking, vol. 8(4), pages 1-19, December.
    21. Hansen, Stephen & McMahon, Michael, 2010. "What Do Outside Experts Bring To A Committee? Evidence From The Bank of England," Economic Research Papers 270783, University of Warwick - Department of Economics.
    22. repec:hal:spmain:info:hdl:2441/2okfbeuvhi9g2pirgpimtke7pn is not listed on IDEAS
    23. Alexander Jung & Gergely Kiss, 2012. "Voting by monetary policy committees: evidence from the CEE inflation-targeting countries," MNB Working Papers 2012/2, Magyar Nemzeti Bank (Central Bank of Hungary).

    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

    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:33743. 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.