Summary of Quarterly Bulletin
Autumn 2002
Each article is available as a
separate pdf file; click on the appropriate title to access
the relevant file. Alternatively you may download the complete
issue 
1.4M). |
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| Markets and operations
(248k) |
This article reviews developments in international and domestic financial markets, drawing on information from the Bank of England's market contacts, and describes the Bank's market operations in the period 17 May 2002 to 23 August 2002. |
| 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. Committees versus individuals: an experimental analysis of monetary policy decision-making
(89k) (by Clare Lombardelli and James Talbot of the Bank's Monetary Assessment and Strategy Division and James Proudman of the Bank's Conjunctural Assessment and Projections Division). This article reports the results of an experimental analysis of monetary policy decision-making under uncertainty. The experiment used a large sample of economically literate undergraduate and postgraduate students from the London School of Economics to play a simple monetary policy game, both as individuals and in committees of five players. The result-that groups made better decisions than individuals-accords with a previous study in the United States with Princeton University students. The experiment also attempted to establish why group decision-making is superior: although some of the improvement was related to committees using majority voting when making decisions, there was a significant additional committee benefit associated with members being able to observe each other's voting behaviour. Parliamentary scrutiny of central banks in the United Kingdom and overseas
(82k)(by Jonathan Lepper, formerly of the Secretariat to the House of Commons Treasury Committee and Gabriel Sterne of the Bank's International Economic Analysis Division). This article reviews the parliamentary scrutiny of central banks in 14 countries using the results from a new survey. There is wide variation in the nature of parliamentary scrutiny within the sample. There is no firm evidence in these data, however, to suggest that particular types of framework are associated with different overall levels of parliamentary scrutiny. The Bank of Japan, Bank of England, European Central Bank (ECB) and Federal Reserve each make higher-than-average appearances before their respective parliaments to discuss monetary policy issues, and the technical support provided to the relevant committees is relatively high in the US Congress and in the European Parliament. The level of scrutiny can be circumstance specific, and some inflation-targeting frameworks have defined specific conditions that would trigger scrutiny and the form it would take. Ageing and the UK economy
(66k) (by Garry Young of the Bank's Domestic Finance Division). This article argues that overall living standards in the United Kingdom are set to double over the next 50 years alongside a sharp increase in the proportion of people over retirement age. While there are clear risks to this outlook, these would be present even without demographic change. Nevertheless an ageing population does appear to increase the risks to the financial welfare of individuals, especially in their old age. If people living longer do not save more when they are working, then either they have to consume less in their old age or work for longer than would have been the case had greater provision been made for retirement. This risk is heightened by general uncertainty about asset returns which becomes more important as the number of people reliant on private pensions increases. The balance-sheet information content of UK company profit warnings
(67k) (by Allan Kearns and John Whitley of the Bank's Domestic Finance Division). This article looks at the information content of profit warnings issued by UK private non-financial companies over the period 1997-2001 in relation to measures of their profitability and balance-sheet strength. It finds that profit warnings are associated with a persistent fall in profit margins and that this decline in margins is larger than for companies who do not issue warnings. The article also finds that profit warnings contain incremental information for other balance-sheet variables: those firms who issue warnings are also more likely to see their gearing levels rise, and investment and dividends fall, than other firms whose profit margins also fall but who do not issue a warning. Money and credit in an inflation-targeting regime
(85k) (by Andrew Hauser and Andrew Brigden of the Bank's Monetary Assessment and Strategy Division). This article is one of a series on the UK monetary policy process. It discusses how the assessment of money and credit data fits into the Bank's quarterly forecast round. Monetary statistics are available more rapidly than most other economic data and provide early information on the near-term economic outlook. The analysis on money and credit might be used to adjust some output of the Bank's macroeconometric model. It could also help the MPC to assess the risks around its central projections, reflected in the inflation and GDP fan charts. |
| Reports |
International Financial Architecture:
the Central Bank Governors' Symposium 2002
(63k) The Central Bank Governors' Symposium 2002 examined the architecture of the world's financial system. Horst Koehler, Managing Director of the IMF, and the Bank of England's two Deputy Governors at the time, David Clementi and Mervyn King, gave the main addresses. This article summarises what they said. It also gives a precis of eight background papers provided for the occasion. Taken together, these eleven contributions explore general aspects of the international financial architecture, as well as discussing how financial crises may be contained or prevented, and best resolved when they do occur. |
