The Bank of England (BoE) holds a peculiar place among central banks in the Western World. At first glance, it seems more entrepreneurial in the type of research papers it publishes, with strong stances taken on financial regulation (in particular on structural reform of banking), distributional effects of quantitative easing, central bank digital currencies or climate change.

 

The BoE also fosters methodological innovation, as exemplified by Andy Haldane’s recent interest in agent-based modelling. Yet, it is not clear to what extent the macroeconomic policies it implements, or the macroeconometric models its economists rely on for forecasting, simulation and policy analysis, substantially differ from those implemented in other central banks or taught in departments of economics.

 

In this project, we combined quantitative analysis, semi-structured interviews and archival evidence to assess the state of the knowledge produced by BoE economists and its uses in the policy decision-making process. We studied the archives of the Economics Division from 1970 to 1995, as well as the working papers, memos, models, Quaterly Bulletin analyses, speeches and interviews in-house economists have produced across decades. We ran 20 interviews with former and current staff members and MPC members. Finally, we built two databases: one with 1400 “research-oriented” documents produced by the BoE since the 1970s as well as 1300 speeches. It allowed us to track the quantitative and qualitative features of the production of research at the Bank. The second one reconstructed the characteristics and career trajectories of close to 400 economists who have worked at the Bank since 1980. We have profiled the transformation of their training, of their academic and public service backgrounds, and of their networks inside and outside the bank. We will provide online access to our cleaned database of BoE document and economists to allow further research.

 

This combination of sources and methods allowed us to track the historical roots of economists’ underlying modelling and storytelling culture back into the 1970s to 2010s. We show that the history academia-policy pipeline at the BoE is not one in which the pipes become more straight, strong and narrow with time. In fact, BoE economists published more work at the academic frontier – in particular in econometrics- in the late 1980s than 10 years later. The reason is that the type of economic research developed was shaped as much by changes in the Bank’s mandate, the development of a structured inflation reporting and decision-making process, and decision-makers’ views of research and of the economic environment as by academic standards. Moreover, the use of models for analysis, simulation and inflation forecasting

purpose has generally not been mechanical. At the staff and decision level alike, it combines mechanics and judgments, it relied in principle or in practice on a suite of models as a response to the radical uncertainty characterizing the economic world, and it prioritized the ability to “tell consistent stories” about inflation and economic variables over theoretical or empirical consistency. Finally, research on macro - and microprudential regulation has a long history at the Bank, but distinct research culture, shifts in mandates.