Rational Partisan Theory, Uncertainty and Spatial Voting: Evidence for the Bank of England's MPC

A. Bhattacharjee, S. Holly

    Research output: Working paper/PreprintWorking paper

    1235 Downloads (Pure)


    The transparency and openness of the monetary policymaking process at the Bank of England has provided very detailed information on both the decisions of individual members of the Monetary Policy Committee and the information on which they are based. In this paper we consider this decision making process in the context of a model in which inflation forecast targeting is used but there is heterogeneity among the members of the committee. We find that rational partisan theory can explain spatial voting behaviour under forecast uncertainty about the output gap. Internally generated forecasts of output and market generated expectations of medium term inflation provide the best description of discrete changes in interest rates, in combination with uncertainty in the macroeconomic environment. There is also a role for developments in asset housing and labour markets. Further, spatial voting patterns clearly differentiates between internal and externally appointed members of the Monetary Policy Committee. The results have important implications for committee design and the conduct of monetary policy.
    Original languageEnglish
    Place of PublicationCambridge
    PublisherFaculty of Economics, University of Cambridge
    Number of pages37
    Publication statusPublished - 2010

    Publication series

    NameCambridge Working Papers in Economics


    • Monetary policy
    • Interest rates
    • Monetary Policy Committee
    • committee decision making


    Dive into the research topics of 'Rational Partisan Theory, Uncertainty and Spatial Voting: Evidence for the Bank of England's MPC'. Together they form a unique fingerprint.

    Cite this