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Research work published by the Bank is intended to
contribute to debate, and is not necessarily a statement of Bank policy.
Understanding broad money  (95k)
(by Ryland Thomas of the Bank's Monetary Assessment and
Strategy Division).
Broad money is at the heart of the monetary transmission
mechanism and consequently plays an important role in the
assessment of inflationary pressures. This article examines
the factors behind stronger broad money and credit growth
in 1995, using recent econometric research undertaken at
the Bank.
How do UK companies set prices? (69k)
(by Simon Hall, Mark Walsh and Tony Yates of the Bank's
Structural Economic Analysis Division).
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 survey was inspired by the work
of Alan Blinder in the United States. The survey has made
available much new information. For example, companies do
not regard the direct costs of changing prices as being
particularly important, although prices are typically changed
infrequently, on average only twice a year. Preserving customer
relationships is very important for firms in making decisions
about prices. And there are many differences among firms
about which factors influence price changes. These 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.
The valuation of sub-underwriting agreements for UK
rights issues (27k)
(by Francis Breedon and Ian Twinn of the Bank's Markets
and Trading Systems Division).
Most equity issues in the United Kingdom are underwritten-that
is, a group of financial institutions guarantees to buy
any unsold shares at a pre-arranged price. The pricing of
this guarantee affects the cost and efficiency of industry's
capital raising. Earlier studies in a number of countries,
including the United Kingdom, have suggested that underwriting
fees are much higher than can be accounted for by fully
competitive pricing. This article explores some modifications
to those previous calculations and concludes that, while
a rather larger part of the fee may be accounted for, there
remains a margin still to be explained.
Bank of England Agents' summary of business conditions (197k)
The Bank is publishing the first quarterly summary of the
reports on current business conditions that it receives
from its Agents in the regions. The first edition of the
summary is enclosed with this copy of the Bulletin.
G7 yield curves (224k)
(by Neil Cooper and Jim Steeley of the Bank's Monetary Instruments
and Markets Division).
In November 1994, the Bank of England adopted a new method
for estimating yield curves from the gilt-edged market.
The curves are used for measuring expectations of future
interest rates and inflation. Recently the Bank used the
same method to estimate the yield curves of the other G7
countries' government debt. This article describes these
yield curves and explains how the estimation method was
adapted to each particular market.
Seasonal adjustment of UK monetary aggregates (17k)
(by Marco Bianchi of the Bank's Monetary Instruments and
Markets Division).
This note describes a study recently published by the Bank
on ways to adjust monetary aggregates for seasonal variation.
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