National Institute Economic Review

Quarterly publication publishes research, commentary and forecasts on economic and social issues, includingeconomic modeling and analysis, productivity and competitiveness and education and training.

Articles from No. 196, April

An Assessment of NIESR Forecast Accuracy-US and Euro Area GDP and Inflation
The Institute periodically reviews the accuracy of its macroeconomic forecasts. Pain et al. (2001) compare the performance of NIESR output forecasts to a naive forecast that uses a simple rule to predict growth next year. They find that between 1980...
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An Independent Bank of England: Is That Enough?
This article argues that an independent central bank is not in itself sufficient to ensure the long-term success and stability of the economy. While there are strong academic arguments for making the central bank independent, these arguments are often...
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Central Bank Independence-Economic and Political Dimensions
This article reviews the empirical evidence and theoretical arguments for central bank independence, including political economy considerations. It concludes that the optimal institutional framework to keep inflation lastingly under control is based...
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Commentary: The Savings-Investment Balance: Is There a UK Investment Shortfall?
Global imbalances In the first half of this decade, the world experienced a period of low short and long-term interest rates. Short-term rates have risen from these low levels, first in Canada and the United Kingdom, then in the United States and...
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Equity Prices and Prospects for Monetary Tightening in Asia
The Asian economies ended 2005 with strong growth momentum as real GDP in China and the newly industrialised economies grew by 5 to 10 per cent in the fourth quarter compared to the last quarter of 2004. Year-on-year economic growth in Japan reached...
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Euro Area-Another Cyclical Recovery?
After weakening in the fourth quarter of 2005, economic growth in the Euro Area once again points to recovery. However, as with previous economic upturns, this cycle does not reflect balanced growth and is leaving the economy largely exposed to developments...
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Globalisation and Its Impact on World Real Interest Rates
Our estimates indicate that global output increased by 4.7 per cent in 2005. This followed an expansion of 5.2 per cent in 2004, and we expect further annual rises of 4 3/4 and 4 1/2 per cent in 2006 and 2007, respectively. Global growth averaged just...
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Is UK Business Investment Unusually Weak?
In the 15 years to 2000 UK business investment rose quite substantially in real terms. Having shown little deviation from an average of 7 1/4 per cent over the period 1965-85, the real share of business investment in GDP measured 10 3/4 per cent in...
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Risks to Consumption in North America
United States US growth slowed to 0.4 per cent in the final quarter of 2005. The sharp slowdown can be attributed largely to the impact of Hurricanes Katrina and Rita in August and September of last year, while rising petrol prices also restrained...
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The Bank of England's Monetary Policy Committee: A View from a Parliamentary Specialist Adviser
This article assesses the new monetary policy regime introduced in the UK in 1997. It discusses the original remit given to the Bank of England, how it has been interpreted by the Bank and the conduct of monetary policy by the Monetary Policy Committee...
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The Brave New World of Central Banking: Policy Challenges Posed by Asset Price Booms and Busts
At the dawn of the 21st century, property and equity ownership are spread more broadly across the population than they once were. One consequence of this is that asset price booms and crashes now have a direct impact on general welfare. The fact that...
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The New Monetary Regime: Introduction
Perhaps the most striking feature of macroeconomic policy of the past twenty or thirty years has been the emergence of a consensus that monetary policy should be delegated to an independent authority. The world has moved from a situation in the 1960s...
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The UK Economy
* CPI inflation will reach 2.4 per cent by the fourth quarter of 2006 and 2.2 per cent by the end of 2007. * The growth outlook has strengthened; GDP will increase by 2.5 per cent in 2006 and 2.8 per cent in 2007, closing the output gap in the middle...
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The World Economy
* Global growth will remain rapid over the next two years, with world GDP rising by 4.8 per cent in 2006 and 4.5 per cent in 2007. * China's growing weight in the global economy is a key reason why interest rates have been unusually low. * The...
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UK Economy Forecast
The production of this forecast is supported by the Institute's Corporate Members: Abbey plc, Bank of England, Barclays Bank plc, Ernst and Young LLP, Marks and Spencer plc, The National Grid Company plc, Nomura Research Institute Europe Ltd, Rio Tinto...
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What Are the Right Models and Policies for a World of Low Inflation?
Monetary policy should be guided by macroeconomic models with limited nominal rigidity; 'New Classical' or even for some issues just plain Classical (i.e. with no nominal rigidity at all) models are perfectly adequate for understanding various aspects...
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