First Impressions Matter: Signalling as a Source of Policy Dynamics

Stephen Hansen and Michael McMahon

No 3782, CESifo Working Paper Series from CESifo

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 fits 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: signalling; learning; monetary policy (search for similar items in EconPapers)
JEL-codes: D78 E52 (search for similar items in EconPapers)
Date: 2012
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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 (2015)
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 (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)
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