We analyze the macroeconomic implications of a transient interest-rate peg in combination with a QE program in a non-linear medium-scale DSGE model. In this context, we re-examine what has become known as the reversal puzzle (Carlstrom, Fuerst and Paustian, 2015) and provide an analytical...

The Bank's Financial Policy Committee (FPC) and Monetary Policy Committee (MPC) are separate committees, each with their own primary objectives, but with a common secondary objective. In addition, the policy actions of one committee can affect economic and financial variables of interest — and...

Is a strong commitment to monetary stability enough to ensure credibility? The recent literature suggests it might not be if the central bank cannot perform pure interest rate policy and has to resort to balance sheet policy: the central bank's financial strength (i.e. the long-term...

We quantify the importance of non-monetary news in central bank communication. Using evidence from four major central banks and a comprehensive classification of events, we decompose news conveyed by central banks into news about monetary policy, economic growth, and separately, shocks to risk...

Following the global financial crisis (GFC) of 2008 there was recognition that client trust in financial institutions had been damaged. While institutional trust has become an accepted barometer, less is known about who trusts the banking and finance sector and who does not. This paper...

Central banks have sometimes turned their attention to long-term interest rates as a target or as a diagnosis of policy. This paper describes two historical episodes when this happened - the US in 1942-51 and the UK in the 1960s - and uses a model of inflation dynamics to evaluate monetary...

In the late eighteenth and early nineteenth century, Scotland had a stable financial system. Its stability arose from the pressure that private banks, which had the right to issue bank notes, placed on each other to behave prudently. Unlike in England, the Scottish banking system had no central...

Does monetary policy affect household inequality? Does household inequality affect monetary policy transmission? We build a two-agent New Keynesian model with conventional monetary policy and central bank asset purchases to quantitatively address these questions. Expansionary shocks to...

The Spring 2003 Quarterly Bulletin contained a report on modelling and forecasting at the Bank of England by Adrian Pagan. This article is a postscript to Professor Pagan's original report, and covers the introduction of the Bank's new macroeconomic model (the Bank of England Quarterly Model, or...