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AbstractDuring the financial crisis, monetary policy was loosened significantly. Debate continues about the extent to which low interest rates and quantitative easing (QE) may have had adverse distributional impacts, whether by income, wealth, age or region. Using quantified simulations on micro data, I show that looser monetary policy had a significantly positive financial impact on the majority of cohorts of UK society. The impact of monetary policy loosening on income and wealth inequality was small and the overall impact on household welfare significantly positive. These results differ from public perceptions of monetary policy. Personalised information on the impact of monetary policy on household balance sheets could help to correct these misperceptions.

Disclaimer: The views expressed are not necessarily those of the Bank of England or the Financial Policy Committee.In the 2011 Wincott Lecture, the author sets out a number of structural factors that have led banks to take on too much risk. The combination of limited liability for equity holders, tax biases that favoured debt over equity, the likelihood that banks would not be allowed to fail, and performance targets linked to short‐term equity returns meant that neither debt nor equity holders had an incentive to constrain bank risk taking. A number of solutions are offered which would better align these incentives with the public good.

This paper discusses some of the operational issues relevant to inflation‐targeting in the United Kingdom, in particular: whether inflation targeting is 'new'; whether it is potentially destabilising; and whether it requires too much knowledge on the part of the authorities. It goes on to discuss the role of inflation forecasts in general, and inflation probability distributions in particular, in the context of inflation‐targeting in the UK. It also discusses the role of transparency in such a regime, and provides some evidence on its effect.

We extend the model of Bernanke and Blinder ('Credit, Money, and Aggregate Demand', American Economic Review, Papers and Proceedings (1988), pp. 435–439) to consider formally interactions between the monetary authorities and the banking sector. Monetary policy is characterized in terms of the authorities' control over prices in the base money market, rather than quantities. But those market rates directly impinging upon real activity are distinct from—although not independent of—this administered rate. Imperfect control over market interest rates obtains. An empirical illustration is given for the UK, and the model is then extended into a stochastic setting.

Version en ingles del documento de trabajo reseñado anteriormente en el Boletin del Sistema Financiero Español n.47, en el que se incluye un resumen del contenido de este documento. (igg) ; En este trabajo se ofrecen algunas estimaciones sectoriales del mecanismo de transmision monetaria en España. Utilizando la metodologia VAR, se cuantifican los efectos que un impulso monetario exogeno tiene sobre las variables intermedias y finales, que son el objetivo de la politica monetaria. Partiendo de que la separacion por instrumento (exogeno) y variables objetivo (endogenas) intermedias y finales es factible, se ofrecen estimaciones significativas del tamaño y velocidad de los efectos de una perturbacion monetaria sobre el nivel de actividad y los precios, y se aporta informacion sobre los mecanismos dominantes a traves de los cuales se propagan los efectos de la politica monetaria. Este ejercicio resulta particularmente relevante cuando la conduccion de la politica monetaria se basa en la fijacion de objetivos en terminos de una variable intermedia. (jeb) (pgp)

Ofrece estimaciones sectoriales del mecanismo de transmision monetaria en España. Utilizando la metodologia VAR, se cuantifican los efectos que un impulso monetario exogeno tiene sobre las variables intermedias y finales que son el objetivo de la politica monetaria. Partiendo de que la separacion entre instrumento (exogeno) y variables objetivo (endogenas) intermedias y finales es factible, se ofrecen estimaciones significativas del tamaño y velocidad de los efectos de una perturbacion monetaria sobre el nivel de actividad y los precios, y se aporta informacion sobre los mecanismos dominantes a traves de los cuales se propagan los efectos de la politica monetaria. Este ejercicio resulta particularmente relevante cuando la conduccion de la politica monetaria se basa en la fijacion de objetivos en terminos de una variable intermedia. Incluye bibliografia.(jeb)(ah)(jha)