Bank of England Homepage
 
About the BankMonetary PolicyBanknotesMarketsFinancial StabilityPublicationsStatisticsEducation
Publications

Summary of Quarterly Bulletin
August 1997

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 (941k).
   
Changes at the Bank of England (36k) In this article, Peter Rodgers, Secretary of the Bank of England, outlines the major changes affecting the Bank recently announced by the Chancellor of the Exchequer. These include a new framework for monetary policy - giving the Bank operational responsibility for setting interest rates - and reform of financial services regulation, under which responsibility for banking supervision will be transferred to an enhanced Securities and Investments Board.
Research and analysis

Research work published by the Bank is intended to contribute to debate, and is not necessarily a statement of Bank policy.

Quantifying some benefits of price stability (339k)
(by Hasan Bakhshi, Andrew G Haldane and Neal Hatch of the Bank's Monetary Analysis Divisions).
This article quantifies some of the costs of inflation in the United Kingdom. It focuses in particular on tax distortions under an imperfectly indexed tax system and distortions to money demand. In the United States, a similar study found that lowering inflation by 2 percentage points could generate welfare benefits of as much as 1% of GDP per year forever. In the United Kingdom, the benefits are found to be smaller but still substantial, at 0.2% of GDP per year.

Inflation and inflation uncertainty (60k)
(by Michael Joyce of the Bank's Monetary Assessment and Strategy Division).
This article examines whether higher inflation has been associated with greater inflation uncertainty in the United Kingdom during the post-war period, using various descriptive and econometric estimates of uncertainty. Though the results cannot establish conclusively whether there has been a causal link, they do suggest that the level of inflation and inflation uncertainty are positively correlated. If inflation uncertainty is costly, this provides a potential justification for directing policy at establishing and sustaining an environment of low inflation.

Quantifying survey data (54k)
(by Alastair Cunningham of the Bank's Conjunctural Assessment and Projections Division).
In this article Alastair Cunningham explains how data from economic surveys can be used to complement official statistics. He sets out a simple framework to analyse how firms respond to surveys and outlines the most widely used technique for converting qualitative responses into a quantitative measure. He shows that the results of this technique are often biased, and describes a more rigorous approach. Possible explanations are put forward for why survey data tend to be less volatile than official data. Finally, the use of forward-looking survey data is discussed.

 Report The evolving role of the IMF in the light of the 1994/95 Mexican crisis (47k)
(by Jon Shields, Alternate Executive Director for the United Kingdom at the IMF, on secondment from the Bank of England).
In this article, Jon Shields describes how the role of the IMF has developed since the Mexican crisis in 1994/95, which prompted the largest international support operation ever undertaken. He sets out the background to the crisis, including the rapid expansion of international capital markets, how the crisis was resolved and the lessons learned from it. Since then, the Fund has acted to improve the quality and extent of data that countries provide, and to enhance its own surveillance. It has also improved its procedures for allowing rapid financial support to be given and taken steps to ensure the adequacy of resources available to the Fund. Two possibilities still under consideration by the Fund are identified: burden-sharing with other creditors and adding the liberalisation of capital controls to the Fund's objectives. Jon Shields concludes that though risks remain, the changes made by the Fund have put it in a better position to deal with another crisis such as that in Mexico.

Back to 1997
Related Links
  • Inflation Report
    Sets out the detailed economic analysis and inflation projections on which the Bank's Monetary Policy Committee bases its interest rate decisions, and presents an assessment of the prospects for UK inflation over the following two years.
Freedom of Information
Sitemap Privacy Policy Disclaimer