| Research and
analysis |
Research work published by the Bank is intended to
contribute to debate, and does not necessarily reflect the views of the Bank or
of MPC members.
Public
attitudes about inflation: a comparative analysis 
(105k)
(by Kenneth Scheve of the Bank's International Economic
Analysis Division).
This article examines public opinion in advanced economies
to assess what the general public thinks about inflation.
Are individual citizens concerned about inflation? How important
a public policy issue do they think it is? What influences
their opinions about inflation? Does opinion about inflation
vary across countries and, if so, what accounts for this
variation? The opinion surveys examined in this article
suggest that the public is generally inflation averse, but
that there is significant variation across different countries.
Evidence is presented that average inflation aversion is
sensitive to factors affecting the expected costs of inflation
for individual countries at particular times.
Measuring
capital services in the United Kingdom
(143k)
(by Nicholas Oulton of the Bank's Structural Economic Analysis
Division).
For many macroeconomic purposes, such as the study of productivity
or the assessment of capacity utilisation, we need measures
of the level and growth rate of the productive services
that the capital stock is capable of providing. The official
estimates of the capital stock produced by the Office for
National Statistics aim to be measures of wealth, not capital
services. So while they are appropriate for their intended
purposes, such as balance sheet analysis, they may not be
appropriate for productivity analysis or in measures of
capacity utilisation. This article discusses the theory
behind a different concept of capital, called here the volume
index of capital services (VICS), and presents estimates
of the VICS for the United Kingdom—based on both a
five-asset breakdown and an eight-asset breakdown—for
the period 1979-99. The eight-asset breakdown includes three
information and communications technology (ICT) assets:
computers, software and telecommunications equipment. The
VICS measure has grown faster than the wealth measures,
and the divergence is more apparent when ICT assets are
included explicitly.
Capital
flows and exchange rates
(179k)
(by Andrew Bailey of the Bank's International Economic Analysis
Division, and Stephen Millard and Simon Wells of the Bank's
Monetary Instruments and Markets Division).
This article focuses on the possible role of capital flows
in explaining exchange rate movements. Some commentators
have suggested that a substantial increase in capital flows
into the United States could have accounted for the recent
appreciation of the US dollar. This could imply that capital
inflows have increased in response to a rise in the rate
of return on capital, which in turn has reflected the structural
increase in US productivity seen in recent years. We find
evidence to suggest that this may explain part of the recent
dollar appreciation, but unsurprisingly it does not provide
a full explanation. |
