Jan Berk
University of Groningen, Faculty of Economics and Business, Faculty Member
The literature on the behavior of the Bank of England’s Monetary Policy Committee (MPC) has focused on static voting patterns. We find statistical support for a dynamic pattern using a panel reaction function to analyze MPC votes over the... more
The literature on the behavior of the Bank of England’s Monetary Policy Committee (MPC) has focused on static voting patterns. We find statistical support for a dynamic pattern using a panel reaction function to analyze MPC votes over the 1997-2008 period. We find that internal and external members do not behave differently in their first year on the MPC. In
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We develop a theoretical framework for studying the effects of interaction on the quaJity of decision-making by monetary policy committees. We show that interaction, i.e. increasing one's expertise through an exchange of views, is... more
We develop a theoretical framework for studying the effects of interaction on the quaJity of decision-making by monetary policy committees. We show that interaction, i.e. increasing one's expertise through an exchange of views, is most likely not to result in interdependent voting behaviour.Therefore, and in contrast to earlier literature, we find that interaction is beneficial for the collective outcome.
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The focus of this paper is on the use of the yield curve in monetary policy making. Theoretical arguments and a multi-country empirical analysis with an explicit focus on the euro area suggest the need for caution in case the Eurosystem... more
The focus of this paper is on the use of the yield curve in monetary policy making. Theoretical arguments and a multi-country empirical analysis with an explicit focus on the euro area suggest the need for caution in case the Eurosystem uses the yield curve as an information variable for monetary policy, because multiple theoretical explanations exist for an observed movement in the yield curve, suggesting that policy reactions cannot be prescribed unambiguously. In addition, the empirical analysis shows that, in contrast with earlier findings of, for example, Hardouvelis (1994) and Bernard and Gerlach (1996), the information content of the yield curve is fairly limited. For the individual European countries participating in the Eurosystem as well as for the euro area as a whole, the yield spread possesses only very limited information relating to future movements in the inflation rate and output growth, over-and-above the information contained in the history of the latter variables...
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This paper models monetary policy decisions as being taken by an interacting group of heterogeneous policy makers, organized in a MPC. We show that communication between members generally improves the quality of monetary policy by... more
This paper models monetary policy decisions as being taken by an interacting group of heterogeneous policy makers, organized in a MPC. We show that communication between members generally improves the quality of monetary policy by increasing knowledge about uncertain future economic developments. Interestingly, we find that it is sometimes beneficial to restrict communication to a subset of MPC members. We also show that the optimal size of a communicating MPC is generally smaller than otherwise. Compared with expanding the MPC, communication is a cost-e.ective way of increasing the quality of monetary policy.
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This paper is part of the Kobe Research Project and documents the Dutch and Thai experiences regarding exchange rate policy, capital controls, and developments in the banking sector. In view of these experiences, it seeks to identify... more
This paper is part of the Kobe Research Project and documents the Dutch and Thai experiences regarding exchange rate policy, capital controls, and developments in the banking sector. In view of these experiences, it seeks to identify requirements for successful currency regimes, in particular requirements for exchange rate stability. In addition, it aims at providing some general lessons that can be learned from the Dutch experience with respect to regional monetary co-operation in Asia.
Most monetary policy committees decide on interest rates using a simple majority voting rule. Given the inherent heterogeneity of committee members, this voting rule is suboptimal in terms of the quality of the interest rate decision, but... more
Most monetary policy committees decide on interest rates using a simple majority voting rule. Given the inherent heterogeneity of committee members, this voting rule is suboptimal in terms of the quality of the interest rate decision, but popular for other (political) reasons. We show that a clustering of committee members into 2 subgroups, as is the case in a hub-and spokes systems of central banks such as the Fed or the ESCB, can eliminate this suboptimality whilst retaining the majority voting rule.
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Most monetary policy committees decide on interest rates using a simple majority voting rule. Given the inherent heterogeneity of committee members, this voting rule is suboptimal in terms of the quality of the interest rate decision, but... more
Most monetary policy committees decide on interest rates using a simple majority voting rule. Given the inherent heterogeneity of committee members, this voting rule is suboptimal in terms of the quality of the interest rate decision, but popular for other (political) reasons. We show that a clustering of committee members into two subgroups, as is the case in hub-and-spokes systems of central banks (e.g. the Fed or the ESCB), can eliminate this inefficiency whilst retaining the simple majority voting rule.
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We assess a New Keynesian macro-economic model that is supplemented with a micro-founded role for money in determining aggregate demand and supply in order to better describe monetary policy transmission. In this model welfare is higher... more
We assess a New Keynesian macro-economic model that is supplemented with a micro-founded role for money in determining aggregate demand and supply in order to better describe monetary policy transmission. In this model welfare is higher if the monetary authority takes money growth explicitly into account when setting interest rates.
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We use panel estimates of regional Phillips curves of the hybrid New-Keynesian type to study price level convergence within the US and EMU. Regional inflation rates tend to eliminate PPP deviations in both monetary unions, with average... more
We use panel estimates of regional Phillips curves of the hybrid New-Keynesian type to study price level convergence within the US and EMU. Regional inflation rates tend to eliminate PPP deviations in both monetary unions, with average half lives between 3 and 4 years. The start of EMU did not greatly affect PPP reversion in the euro area. Where changes in nominal exchange rates accounted for the bulk of the adjustment process before 1999, this role was largely taken over by regional inflation differences since. Notwithstanding clear evidence of forward-lookingness in the US, inflation persistence is substantial in both monetary unions.
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Using a New-Keynesian framework, we investigate how far the inflationary processes in member states of EMU cause regional price levels to converge. We fail to produce hard evidente of the present existence of such an adjustment mechanism,... more
Using a New-Keynesian framework, we investigate how far the inflationary processes in member states of EMU cause regional price levels to converge. We fail to produce hard evidente of the present existence of such an adjustment mechanism, not-withstanding that inflation in some countries tends to converge towards the euro area level. Overall, inflation persistence has declined significantly over the years, but there are still marked differences between countries on this score. We conclude that the euro area is not an optimal currency area yet, lending support to the quest for further structural reforms in European labour and product markets.
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Summary This article examines the long-run, relationship between Dutch and German consumer prices during the period 1961–1991. Two hypotheses are examined. The first deals with the ultimate objective of the guilder-Dmark peg and the... more
Summary This article examines the long-run, relationship between Dutch and German consumer prices during the period 1961–1991. Two hypotheses are examined. The first deals with the ultimate objective of the guilder-Dmark peg and the second is whether Dutch and German prices are cointegrated. Accounting for an exogenous structural changes related to the estableshment of the EMS, the empirical evidence supports
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This paper investigates international co-movement in bond yields by testing for uncovered interest parity (UIP). Existing work is supplemented by focusing on long instead of short-term interest rates and by employing exchange rate... more
This paper investigates international co-movement in bond yields by testing for uncovered interest parity (UIP). Existing work is supplemented by focusing on long instead of short-term interest rates and by employing exchange rate expectations derived from purchasing power parity (PPP) instead of actual outcomes. Among the major currencies during 1975-97, the paper does not find a further increase in co-movement