Other Macroeconomic Analysis
2007 Q3
Extracting a better signal from uncertain data 
(730k)
By Alastair Cunningham and Christopher Jeffery
Most macroeconomic data are uncertain - they are estimates rather than perfect measures. One symptom of that uncertainty is the propensity of statistical agencies to revise their estimates in light of new information or methodological advances. While revisions should move estimates closer to the 'truth', the potential for early estimates to be revised poses challenges for forecasting and economic analysis. Over the past few years, Bank staff have undertaken a range of research into how best to deal with the ensuing uncertainty. The results of that research have been used for some time as part of the toolkit available to staff when briefing the Monetary Policy Committee. This article describes some further developments in that research effort aimed at refining the staff's toolkit.
2007 Q3
The Bank of England Credit Conditions Survey (417k)
By Ronnie Driver
The Bank has for many years held regular discussions with major UK lenders and money market participants to discuss trends in credit markets. Earlier this year, the Bank began supplementing these discussions with a formal Credit Conditions Survey, similar to those already conducted by the US Federal Reserve, the Bank of Japan and the European Central Bank. The survey is intended to assess trends in the demand for, and the supply of credit, including terms and conditions. It covers both household and corporate lending markets. Although the concept of the survey predates the recent movements in financial markets, the first results of the survey, which will be published on 26 September, will provide a good opportunity to assess trends in credit conditions. This article introduces the survey.
2006 Q4
The state of British household finances: results from the 2006 NMG Research survey (489k)
By Matt Waldron and Garry Young
This article summarises the key results from the latest survey carried out for the Bank by NMG Research about the state of household finances. There was little change in the proportion of households who reported problems with their unsecured debt, although there was a small increase in the proportion of mortgagors having difficulty paying for their mortgage. The share of overall income accounted for by households reporting either type of problem was relatively small, suggesting that any impact on aggregate consumer spending is likely to have been muted. The most common explanations given for debt problems were temporary cash-flow shortfalls and overspending; the most popular way of resolving these issues was to cut back spending. Very few households said they considered bankruptcy a solution to their debt problems.
The raw survey data are available in Excel format. 
(944kb)
2006 Q4
Measuring market sector activity in the United Kingdom (550k)
By Rohan Churm, Sylaja Srinivasan, Ryland Thomas, Sanjiv Mahajan, Fenella Maitland-Smith and Geoff Tily
A measure of private or market sector activity is useful for assessing demand pressures and productivity trends in the economy. This article discusses the practical issues involved in constructing a measure of the market sector's gross value added (MSGVA) for the United Kingdom. It looks at the existing estimates currently constructed by the ONS and the Bank of England using National Accounts data, and discusses how the Bank of England uses these estimates when analysing demand pressures in the economy.
Summer 2006
House prices and consumer spending (410k)
By Andrew Benito, Jamie Thompson, Matt Waldron and Rob Wood
This article explores the complex relationship between house prices and consumer spending. It explains that the strength of the relationship can vary considerably over time. And it highlights the key roles that both common factors and causal links have played in the weakening association between house prices and consumer spending in recent years.
Spring 2006
The distribution of assets, income and liabilities across UK households: results from the 2005 NMG Research survey (562k)
By Richard Barwell, Orla May and Silvia Pezzini
This article summarises the key results from the latest survey carried out for the Bank by NMG Research about the state of household finances. A relatively small proportion of households accounted for a large amount of the assets owned, income earned and debts owed by the whole sample. The majority of households appeared to be comfortable with their finances. But there were a small number of households who appeared to be in distress: typically they had below-average incomes and no or not many assets to draw on. The proportion of the sample in financial distress was little changed from a year earlier. The survey indicated that very few people viewed bankruptcy as a solution to debt problems.
The raw survey data are available in Excel format. (1.8mb)
Winter 2005
Introducing the Agents’ scores (708k)
By Colin Ellis and Tim Pike
Each month, the Bank’s twelve Agents make quantitative assessments of economic conditions as seen from their respective countries and regions. These scores provide numerical measures of the intelligence that the Agents gather from month to month, and cover some areas of the economy where there are no official statistics. The scores are also timely and some have a high correlation with subsequently published ONS data. As such, they can be useful indicators of the current economic conjuncture. This article examines the scores that have been used in the regular MPC process since 1997. From January 2006, the scores will be published on the Bank’s internet site.
Summer 2005
The impact of government spending on demand pressure (360k)
By Bob Hills, Ryland Thomas and Tony Yates
Government output is not necessarily an informative guide to the impact of government spending on the balance of demand and supply pressures in the marketed sector of the economy. Instead, it may be more informative to consider the quantity of resources that the government absorbs - that is, how much private sector output it buys and how much labour it hires - rather than the quantity of output it produces.
Spring 2005
Dealing
with data uncertainty
(95k)
By James Ashley, Ronnie Driver, Simon Hayes and Christopher
Jeffery
This article presents a simple methodology for deriving ‘best
guesses’ of the true values of economic variables by weighting
together official estimates and information from business surveys.
Spring 2005
Indicators
of short-term movements in business investment
(230k)
By Sebastian Barnes and Colin Ellis
Business surveys provide more timely news about investment than
official data. The surveys also include forward-looking information.
This article examines some survey-based indicators of business
investment. Using simple techniques, several indicators are
found to contain information about the path of investment.
Winter 2004
Stability
and statistics
(130k)
Speech by Rachel Lomax, to the North Wales Business Club
Notes that the past decade has been a time of unparalleled macroeconomic
stability. This has helped to give policymakers a high degree
of credibility. But good monetary policy decisions depend on
good information. Bank staff work very closely with the ONS
to interpret and improve the national statistics. As well as
monitoring a wide range of different indicators, and paying
close attention to data quality, the MPC talks to business people
through the Bank's network of Agents and members' own regional
visits.
Autumn 2004
How
should we think about consumer confidence?
(121k)
By Stuart Berry and Melissa Davey
Shows that the standard economic determinants of consumption
such as income, wealth and interest rates can 'explain' a large
part of the movements in consumer confidence. But confidence
is also affected by non-economic events, or may react in a complex
manner to unusual economic events. Such 'unexplained' movements
in consumer confidence do not appear to be closely related to
households' spending decisions on average. So although consumer
confidence is available well ahead of official data on consumer
spending it is important to consider why confidence has changed
before assessing its likely implications for consumption.
Autumn 2003
The
optimal rate of inflation: an academic perspective
(80k)
By Peter Sinclair
This article argues that, in an economy free of all imperfections,
inflation should be slightly negative. But the existence of
various imperfections in the economy is likely to justify a
small positive rate of inflation, similar to the rate central
banks typically aim for.
Summer 2003
What
caused the rise in the UK terms of trade?
(123k)
By Karen Dury, Laura Piscitelli, Maria Sebastia-Barriel and
Tony Yates
The UK terms of trade rose by 15% from 1995 Q3 to 2003 Q1. This
article looks at alternative explanations of why this happened,
and what they mean for the likelihood that the terms of trade
increase will endure.
Spring 2002
Explaining
trends in UK business investment
(114k)
By Hasan Bakhshi and Jamie Thompson
The ratio of business investment to GDP at constant prices has
been trending upwards over the past two decades, picking up
sharply in the second half of the 1990s. This article investigates
possible explanations.
Winter 2001
Do
we have a new economy?
(100k)
Speech by Sushil B Wadhwani, delivered at the CEPR/ESI Conference
'Old Age, New Economy and Central Banking' in Helsinki
Argues that the US and UK economies are 'new' in that structural
changes have led to a breakdown of some of the historical relationships
that help inform the setting of monetary policy. Evidence is
presented suggesting that the equilibrium rate of unemployment
has fallen in both countries, and that the underlying rate of
productivity growth has risen in the United States.
QB Autumn 2001
Has
UK labour market performance changed?
(84k)
Speech by Professor Stephen Nickell at the Society of Business
Economists
This speech asks why wage inflation has remained stable despite
the fact that unemployment is at its lowest level for a generation.
The answer is that the level of unemployment consistent with
stable inflation (the NAIRU) has fallen substantially since
the 1980s. Professor Nickell argues that the main factors underlying
the fall in the NAIRU over the past 20 years have been the decline
in the role of trade unions and the tightening of the benefits
system. The small fall in unemployment taxes, changes in product
market competition and the introduction of the National Minimum
Wage have not played an important role. Professor Nickell also
looks at changes in activity rates over the same period.
QB Spring 2001
Saving,
wealth and consumption
(98k)
By Melissa Davey
This article discusses the various forms of household saving
and their determinants, and discusses the interactions between
saving, wealth and consumption.
February 2000
Back
to the future of low global inflation
(83k)
Maxwell Fry Global Finance Lecture at the University of Birmingham
delivered by DeAnne Julius
Considers the possible effects on UK inflation of intensified
competitive pressures on the supply side of the economy, stemming
from globalisation, new technologies and greater price transparency.
November 1998
Inflation
and growth in a service economy
(99k)
(pdf file 99k)
By DeAnne Julius and John Butler
Sets out the initial findings of a project team set up by the
Bank to examine the behaviour of the service sector, in the
light of the increasingly important role that services play
in the UK economy, and so in achieving the Government's inflation
target. It presents a series of stylised facts about the service
sector from 1970 to1997, and notes areas for further work.
August 1998
Are
prices and wages sticky downwards?
(80k)
By Anthony Yates
This examines the theoretical and empirical evidence for prices
being sticky downwards - in other words, for the existence of
downward nominal rigidities. This evidence has most commonly
been cited in the context of wages - if downward nominal rigidities
exist and prevent wages from adjusting fully to a shock to demand
or supply, then such a shock may affect levels of employment.
Concludes that the theoretical and empirical cases are both
at best unproven.
May 1996
How
do UK companies set prices?
(69k)
By Simon Hall, Mark Walsh and Tony Yates
In the autumn of 1995, the Bank conducted a survey of price-setting
behaviour in 654 UK companies that maintain regular contact
with the Bank's Agents. The results throw light on how monetary
policy - which is focused on the control of inflation - affects
the economy. The article describes the survey results and how
they compare with other information about UK price setting.
