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The Bank of England: Own Goal for Blanchflower?

21/01/2010

Former Monetary Policy Committee member David Blanchflower had a prolonged whinge about the Bank of England yesterday – claiming that its procedures for identifying risks to UK economic stability were not fit for purpose.
This is hardly new for Blanchflower, who was once the MPC’s tame critic. But there were clear signs from the Bank in the two years before this financial crisis hit – including speeches from Governor Mervyn King – that the economy was in trouble and that the government needed to introduce fiscal measures and tighten regulation to head off disaster.
The Bank of England has a very sophisticated ‘belt-and-braces’ research system, which combines complex mathematical modeling, based on quantitative data, with an extensive qualitative research programme.
Interestingly, when the crisis hit in 2008, it was this qualitative dataset, derived from twelve thousand interviews annually with business leaders across the country, which gave the most accurate picture of business on the ground.
So, even though the two month old data which feed the Bank’s models couldn’t give an up-to-date picture, there was robust information from the Bank’s thirty-odd agents around the country who visit businesses week in and week out.
So, am I the only one to think that Blanchflower has taken after his famous namesake and scored a bit of an own goal?

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