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Asymmetries in Bank of England monetary policy
This article estimates limited dependent variable models for Bank of England monetary policy using monthly data over the period June 1997–March 2003. During this period the Bank had operational independence to set the interest rate in order to meet the inflation target set by the government. The stu...
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| Format: | Default Article |
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2004
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| Online Access: | https://hdl.handle.net/2134/2087 |
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| _version_ | 1818175174082560000 |
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| author | Jamie Gascoigne Paul Turner |
| author_facet | Jamie Gascoigne Paul Turner |
| author_sort | Jamie Gascoigne (7195166) |
| collection | Figshare |
| description | This article estimates limited dependent variable models for Bank of England monetary policy using monthly data over the period June 1997–March 2003. During this period the Bank had operational independence to set the interest rate in order to meet the inflation target set by the government. The study finds evidence that the Bank has responded to current output growth rather than inflation, which is consistent with targeting future inflation when there is a lag in the response of inflation to the output gap. It also finds evidence of an asymmetry in the sense that the link between the interest rate and output growth is stronger when an increase in the interest rate is required than when circumstances dictate it should be cut. On the other hand there is considerably more inertia for interest rate cuts, in the sense that a cut in the rate in one month significantly increases the probability of a cut in the next month which is not the case for increases. |
| format | Default Article |
| id | rr-article-9491402 |
| institution | Loughborough University |
| publishDate | 2004 |
| record_format | Figshare |
| spelling | rr-article-94914022004-01-01T00:00:00Z Asymmetries in Bank of England monetary policy Jamie Gascoigne (7195166) Paul Turner (1250805) Other economics not elsewhere classified untagged Economics not elsewhere classified This article estimates limited dependent variable models for Bank of England monetary policy using monthly data over the period June 1997–March 2003. During this period the Bank had operational independence to set the interest rate in order to meet the inflation target set by the government. The study finds evidence that the Bank has responded to current output growth rather than inflation, which is consistent with targeting future inflation when there is a lag in the response of inflation to the output gap. It also finds evidence of an asymmetry in the sense that the link between the interest rate and output growth is stronger when an increase in the interest rate is required than when circumstances dictate it should be cut. On the other hand there is considerably more inertia for interest rate cuts, in the sense that a cut in the rate in one month significantly increases the probability of a cut in the next month which is not the case for increases. 2004-01-01T00:00:00Z Text Journal contribution 2134/2087 https://figshare.com/articles/journal_contribution/Asymmetries_in_Bank_of_England_monetary_policy/9491402 CC BY-NC-ND 4.0 |
| spellingShingle | Other economics not elsewhere classified untagged Economics not elsewhere classified Jamie Gascoigne Paul Turner Asymmetries in Bank of England monetary policy |
| title | Asymmetries in Bank of England monetary policy |
| title_full | Asymmetries in Bank of England monetary policy |
| title_fullStr | Asymmetries in Bank of England monetary policy |
| title_full_unstemmed | Asymmetries in Bank of England monetary policy |
| title_short | Asymmetries in Bank of England monetary policy |
| title_sort | asymmetries in bank of england monetary policy |
| topic | Other economics not elsewhere classified untagged Economics not elsewhere classified |
| url | https://hdl.handle.net/2134/2087 |