Please use this identifier to cite or link to this item:
Title: MPC Voting, Forecasting and Inflation
Authors: Charemza, Wojciech
Ladley, Daniel
First Published: 2016
Publisher: Elsevier for International Institute of Forecasters
Citation: International Journal of Forecasting
Abstract: [1st paragraph] This research is stimulated by the empirical observation that long-term inflation forecasts published by central banks which target inflation tend to be biased towards the target. To explain this we examine how the voting behaviour of members of a monetary policy committee (MPC) may influence its ability to targeting inflation. While the subject of the influence of decisions taken by the MPC on macroeconomic stability is well researched, relatively little is known about the effects of the intra-committee dynamics of MPC’s on future inflation. It is hypothesized here that the manner in which MPC’s make decisions, including individual preferences and interactions between MPC members, affect the decisions themselves and the subsequent outcomes. More precisely, the hypotheses are [1] bias might result from direct or indirect pressure from the leading members of the MPC on the forecasters, so that the longterm goals of the monetary policy appear to be feasible; [2] voting of the MPC members regarding policy decisions based on such biased forecasts might result in undertaking unnecessarily active decisions, which in turn lead to an increased volatility and persistence of inflation. Additionally, we aim to further the findings of Fritsche et al. (2015) and Fildes (2015), that organisational and psychological factors affect the rationality of forecasters’ behaviour, by explaining the possible outcomes of such behaviour.
ISSN: 0169-2070
Links: TBA
Embargo on file until: 1-Jan-10000
Version: Post-print
Status: Peer-reviewed
Type: Journal Article
Rights: Creative Commons “Attribution Non-Commercial No Derivatives” licence CC BY-NC-ND, further details of which can be found via the following link:
Description: JEL codes: E47, E52, E58
Appears in Collections:Published Articles, Dept. of Economics

Files in This Item:
File Description SizeFormat 
CB forecasts IJoF revised_DL_W4.pdfPost-review (final submitted)1.32 MBAdobe PDFView/Open

Items in LRA are protected by copyright, with all rights reserved, unless otherwise indicated.