Abstract
We examine the dissent voting record of the Bank of England Monetary Policy Committee. Contrary to findings in the FOMC literature (for example Havrilesky and Schweitzer in The Political Economy of American Monetary Policy, pp. 197–210, 1990; Chappell et al. in Q. J. Econ. 108(1):185–218, 1993), the effects of members’ career backgrounds and the political channel of appointment on voting behavior are negligible, reflecting the distinct institutional constraints and incentives associated with UK monetary policy. Our findings also suggest that literature which characterizes voting behavior as being predominantly determined by members’ internal or external status is overly simplistic. This view is supported by econometric results appertaining to the introduction of member-specific fixed-effects, which account for possible unobserved heterogeneity.
Similar content being viewed by others
References
Adolph, C. (2005). Three simple tests of career influences on monetary policy. Paper presented at the annual meeting of the American Political Science Association, Marriott Wardman Park, Omni Shoreham, Washington Hilton, Washington, DC, September 1st, 2005.
Alesina, A., & Roubini, N. (1992). Political cycles in OECD economies. Review of Economic Studies, 59(4), 663–688.
Bank of England. (1999). The transmission mechanism of monetary policy. Bank of England. Available from www.bankofengland.co.uk.
Belongia, M. T. (2007). Opaque rather than transparent: why the public cannot monitor monetary policy. Public Choice, 133, 259–267.
Besley, T., Meads, N., & Surico, P. (2008). Insiders versus outsiders in monetary policymaking. American Economic Review (Papers and Proceedings), 98(2), 218–223.
Bhattacharjee, A., & Holly, S. (2005). Inflation targeting, committee decision making and uncertainty: the case of the Bank of England’s MPC. Cambridge Working Papers in Economics 05/30, University of Cambridge.
Blanchflower, D. (2006). Reflections on my first four votes on the MPC. Speech given at the Bank of England’s Agency for Wales, Wednesday 27th September 2006.
Blinder, A. (2007). Monetary policy by committee: why and how? European Journal of Political Economy, 23(1), 106–123.
Blinder, A., & Wyplosz, C. (2005). Central bank talk: committee structure and communication policy. Conference paper, Central Bank Communication, at the ASSA meetings, Philadelphia.
Brooks, R., Harris, M., & Spencer, C. (2007). An inflated ordered probit model of monetary policy: evidence from MPC voting data. MPRA Paper 8509, University Library of Munich, Germany.
Buiter, W. (1999). Answers to the questionnaire ‘Bank of England commission; issues for consideration’. December 17th 1999.
Buiter, W. (2008). A financial stability committee for the Bank of England? http://blogs.ft.com/maverecon/2008/06/a-financial-stability-committee-for-the-bank-of-england/, June 11, 2008.
Chappell, H. W., & McGregor, R. R. (2000). A long history of FOMC voting behavior. Southern Economic Journal, 66(4), 906–922.
Chappell, H. W. Jr., Havrilesky, T. M., & McGregor, R. R. (1993). Partisan monetary policies: Presidential influence through the power of appointment. Quarterly Journal of Economics, 108(1), 185–218.
Chappell, H. W. Jr., Havrilesky, T. M., & McGregor, R. R. (1995). Policymakers, institutions, and central bank decisions. Journal of Economics and Business, 47(2), 113–136.
Chappell, H. W. Jr., McGregor, R. R., & Vermilyea, T. (2004). Majority rule, consensus building, and the power of the Chairman. Journal of Money, Credit, and Banking, 36(3), 408–422.
Chappell, H. W. Jr., McGregor, R. R., & Vermilyea, T. (2005). Committee decisions on monetary policy. Cambridge: MIT Press.
Cobham, D. (2000). Restoring trust at the Treasury. Financial Times. 10th August 2000.
Du Plessis, S. A. (2005). The democratic deficit and inflation targeting. South African Journal of Economics, 73(1), 93–104.
Gerlach-Kristen, P. (2003). Insiders and outsiders at the Bank of England. Central Banking, 14(1), 96–102.
Gerlach-Kristen, P. (2009). Outsiders at the Bank of England’s MPC. Journal of Money, Credit and Banking, 41(6), 1099–1115.
Gildea, J. A. (1990). Explaining FOMC members’ votes. In T. Mayer (Ed.), The political economy of American monetary policy (pp. 211–228). Cambridge: Cambridge University Press.
Goodhart, C. A. E. (2001). The inflation forecast. National Institute Economic Review, 175, 59–66.
Goodhart, C. A. E. (2005). The Monetary Policy Committee’s reaction function: an exercise in estimation. Topics in Macroeconomics 5(1), Article 18.
Goodhart, C. A. E. (2006). Letter. In The state of monetary policy. Select Committee on Economic Affairs, House of Lords, First Report, December 18th.
Goodhart, C. A. E., & Meade, E. (2003). Central banks and supreme courts. Mimeo, London School of Economics.
Greene, W. (2004). The behaviour of the maximum likelihood estimator of limited dependent variable models in the presence of fixed effects. Econometrics Journal, 7(1), 98–119.
Grilli, V., Masciandaro, D., & Tabellini, G. (1991). Political and monetary institutions and public financial policies in the industrial countries. Economic Policy, 6, 341–392.
Harris, M. N., & Spencer, C. (2009). The policy choices and reaction functions of Bank of England MPC members. Southern Economic Journal, 76(2), 482–499.
Havrilesky, T., & Gildea, J. A. (1992). Reliable and unreliable partisan appointees to the Board of Governors. Public Choice, 73(4), 397–417.
Havrilesky, T., & Schweitzer, R. (1990). A theory of FOMC dissent voting with evidence from the time series. In T. Mayer (Ed.), The political economy of American monetary policy (pp. 197–210). Cambridge: Cambridge University Press.
Heckman, J. (1981). Statistical models for discrete panel data. In C. Manski, & D. McFadden (Eds.), Structural analysis of discrete data with econometric applications. Cambridge: MIT Press.
Heiss, F. (2007). Limited dependent panel data models with AR(1) error components in Stata. Mimeo, University of Munich, Department of Economics, December 2007.
Howard, M. (2002). Speech to the Institute for Public Policy Research. Monday March 11, 2002.
Keech, W. R., & Morris, I. L. (1997). Appointments, presidential power, and the Federal Reserve. Journal of Macroeconomics, 19(2), 253–267.
Krause, G. A. (1994). Federal Reserve policy decision making: political and bureuacratic influences. American Journal of Political Science, 38(1), 124–144.
Krause, G. A. (1996). Agent heterogeneity and consensual decision making on the Federal Open Market Committee. Public Choice, 88(1), 83–101.
McCallum, B. T. (1995). Two fallacies concerning central bank independence. American Economic Review (Papers and Proceedings), 85, 207–211.
McGregor, R. R. (2007). Federal Reserve transparency: the more things change, the more they stay the same? Public Choice, 133, 269–273.
Meade, E. E., & Stasavage, D. (2008). Publicity of debate and the incentive to dissent: evidence from the US Federal Reserve. Economic Journal, 118(525), 695–717.
Morris, I. L. (2002). Congress, the President, and the Federal Reserve: the politics of American monetary policy-making. Ann Arbor: University of Michigan Press.
Mueller, D. C. (2005). Constitutional political economy in the European Union. In W. F. Shughart II, & R. D. Tollison (Eds.), Policy changes and political responses: public choice perspectives on the post 9/11 world (pp. 57–73). Berlin: Springer.
Nakahara, N. (2001). Speech given by Nobuyuki Nakahara, member of the Policy Board of the Bank of Japan, at the Capital Markets Research Institute in Tokyo on December 11, 2001.
Neyman, J., & Scott, E. (1948). Consistent estimates based on partially consistent observations. Econometrica, 39, 359–382.
Riboni, A., & Ruge-Murcia, F. J. (2008). Preference heterogeneity in monetary policy committees. International Journal of Central Banking, 4(1), 213–233.
Santoni, G. J. (1984). A private central bank: some olde English lessons. Federal Reserve Bank of St. Louis Review, 66, 12–22.
Shughart, W. F. II, & Tollison, R. D. (1983). Preliminary evidence on the use of inputs by the Federal Reserve system. American Economic Review, 73(3), 291–304.
Taylor, J. (1993). Discretion versus policy rules in practice. Carnegie-Rochester Conference Series on Public Policy, 38, 195–214.
Treasury Select Committee (1999). Research assistance for Monetary Policy Committee members. Treasury Committee Report HC 43 290, 9 December 1999.
Treasury Select Committee (2007a). The Monetary Policy Committee of the Bank of England: ten years on, Vol. I. Treasury Committee Report HC 299-I, published on 18 September 2007.
Treasury Select Committee (2007b). The Monetary Policy Committee of the Bank of England: ten years on, Vol. II. Treasury Committee Report HC 299-II, published on 19 February 2007.
Tucker, P. (2008). Remarks on ‘Making monetary policy by committee’. Discussant remarks by Mr Paul Tucker, Executive Director and Member of the Monetary Policy Committee of the Bank of England, on “Making Monetary Policy by Committee” by Alan Blinder, at the Bank of Canada Conference “International Experience with the conduct of Monetary Policy Under Inflation Targeting”, Ottawa, 22–23 July 2008.
Vaubel, R. (1997). The bureaucratic and partisan behavior of independent central banks: German and international evidence. European Journal of Political Economy, 13(2), 201–224.
Wadhwani, S. B. (2002). The MPC: some further challenges. National Institute of Economic and Social Research Governors’ Seminar. National Institute of Economic and Social Research.
Wooldridge, J. (2002). Econometric analysis of cross section and panel data. Cambridge: MIT Press.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Harris, M.N., Levine, P. & Spencer, C. A decade of dissent: explaining the dissent voting behavior of Bank of England MPC members. Public Choice 146, 413–442 (2011). https://doi.org/10.1007/s11127-010-9597-6
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11127-010-9597-6