 RATIONAL PARTISAN THEORY, UNCERTAINTY, AND SPATIAL VOTING: EVIDENCE FOR THE BANK OF ENGLAND'S MPCArnab Bhattacharjee and Sean Holly Economics and Politics, 2010, vol. 22, issue 2, 151-179 Abstract: The transparency and openness of the monetary policy‐making process at the Bank of England has provided very detailed information on both the decisions of individual members of the Monetary Policy Committee (MPC) and the information on which they are based. In this paper, we consider this decision‐making process in the context of a model in which inflation forecast targeting is used, but there is heterogeneity among the members of the committee. We find that rational partisan theory can explain spatial voting behavior under forecast uncertainty about the output gap. Internally generated forecasts of output and market‐generated expectations of medium‐term inflation provide the best description of discrete changes in interest rates, in combination with uncertainty in the macroeconomic environment. There is also a role for developments in asset, housing and labor markets. Further, spatial voting patterns clearly differentiate between internally and externally apzpointed members of the MPC. The results have important implications for committee design and the conduct of monetary policy. Date: 2010 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:ecopol:v:22:y:2010:i:2:p:151-179 Ordering information: This journal article can be ordered from Access Statistics for this article Economics and Politics is currently edited by Peter Rosendorff More articles in Economics and Politics from Wiley Blackwell |
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