First Impressions Matter: Signalling as a Source of Policy Dynamics

Michael McMahon and Stephen E. Hansen

No 572, Working Papers from Barcelona School of Economics

Abstract: We first establish that policymakers on the Bank of England's Monetary Policy Committee choose lower interest rates with experience. We then reject increasing confidence in private information or learning about the structure of the macroeconomy as explanations for this shift. Instead, a model in which voters signal their hawkishness to observers better ts the data. The motivation for signalling is consistent with wanting to control inflation expectations, but not career concerns or pleasing colleagues. There is also no evidence of capture by industry. The paper suggests that policy-motivated reputation building may be important for explaining dynamics in experts' policy choices.

Keywords: monetary policy; learning; Signalling (search for similar items in EconPapers)
JEL-codes: D78 E52 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-cba, nep-cta and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://bw.bse.eu/wp-content/uploads/2015/09/572-file.pdf (application/pdf)

Related works:
Journal Article: First Impressions Matter: Signalling as a Source of Policy Dynamics (2016)
Working Paper: First Impressions Matter: Signalling as a Source of Policy Dynamics (2013)
Working Paper: First Impressions Matter: Signalling as a Source of Policy Dynamics (2012)
Working Paper: First Impressions Matter: Signalling as a Source of Policy Dynamics (2012)
Working Paper: First Impressions Matter: Signalling as a Source of Policy Dynamics (2011)
Working Paper: First impressions matter: signalling as a source of policy dynamics (2011)
Working Paper: First impressions matter: Signalling as a source of policy dynamics (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:572

Access Statistics for this paper

More papers in Working Papers from Barcelona School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Bruno Guallar ().