The Tempered Ordered Probit (TOP) Model with an Application to Monetary Policy

William H. Greene, Max Gillman, Mark Harris and Christopher Spencer

No 2013-04, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: We propose a Tempered Ordered Probit (TOP) model. Our contribution lies not only in explicitly accounting for an excessive number of observations in a given choice category - as is the case in the standard literature on inflated models; rather, we introduce a new econometric model which nests the recently developed Middle Inflated Ordered Probit (MIOP) models of Bagozzi and Mukherjee (2012) and Brooks, Harris, and Spencer (2012) as a special case, and further, can be used as a specification test of the MIOP, where the implicit test is described as being one of symmetry versus asymmetry. In our application, which exploits a panel data-set containing the votes of Bank of England Monetary Policy Committee (MPC) members, we show that the TOP model affords the econometrician considerable flexibility with respect to modeling the impact of different forms of uncertainty on interest rate decisions. Our findings, we argue, reveal MPC members. asymmetric attitudes towards uncertainty and the changeability of interest rates.

Keywords: Monetary policy committee; voting; discrete data; uncertainty; tempered equations (search for similar items in EconPapers)
JEL-codes: C3 E50 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2013-09
New Economics Papers: this item is included in nep-cba, nep-cdm, nep-dcm, nep-ecm, nep-mac and nep-mon
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/28348/wp2013-4.pdf

Related works:
Working Paper: The Tempered Ordered Probit (TOP) model with an application to monetary policy (2013)
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:hit:hitcei:2013-04

Access Statistics for this paper

More papers in CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University Contact information at EDIRC.
Bibliographic data for series maintained by Reiko Suzuki ( this e-mail address is bad, please contact ).