What’s in a Second Opinion? Shadowing the ECB and the Bank of England
47 Pages Posted: 31 Jul 2012
Date Written: June 1, 2012
The European Central Bank (ECB) and the Bank of England (BoE) are shadowed by professionals and academic economists who provide a separate policy rate recommendation in advance of the central bank’s announcement. We explore differences between shadow and actual committee decisions based on an adapted Taylor rule and report a few systematic differences especially in the case of euro area shadow committee when the data are disaggregated according to the background of the shadow members, and when the member’s country of origin is considered. The shadow committee of the ECB also tends to be relatively less inflation averse than its UK counterpart, at least vis‐á‐vis the respective policy making bodies. Perhaps most significantly our interpretation of the stance of the shadow committees is sensitive to the use of real time data.
Keywords: monetary policy committees, Taylor rules, central bank communication
JEL Classification: E52, E58, E61, E69
Suggested Citation: Suggested Citation