Select Committee on Treasury Appendices to the Minutes of Evidence


Supplementary Note from the Bank of England


  At the Treasury Committee hearing attended by Baroness Noakes and other non-executive Directors on 12 December 2000 it was agreed that answers would be sought from the Bank to two questions, about new economy research and about the morale survey. The answers follow, with apologies for the delay.


  The Treasury Committee asked Baroness Noakes for information on "new economy" work under way at the Bank of England, with a particular reference to work being undertaken by the individual researchers attached to external members of the MPC.

  The work in this area has a number of strands. Nick Oulton of the Monetary Analysis Division is working on a set of measurement issues posed by Information Communications and Technology (ICT), including the implications of the use of alternative computer price measures. The preliminary results from this project were referred to in a speech by Sushil Wadhwani to the HSBC Global Investment Seminar on 12 October 2000, and will be made available to the TC when finalised.

  Other members of the Monetary Analysis Division (Hasan Bakhshi and Jens Larsen) are analysing the implications of advances in production techniques of the ICT goods for output growth. In a competitive environment, such advances cause the price of ICT goods to fall, in turn increasing investment in these goods. The work quantifies the contribution of such investment, associated with declines in ICT prices, to aggregate productivity growth.

  Some work has been carried out by economists working directly for external MPC members (Jenni Greenslade and Nick Davey, both of whom work for Sushil Wadhwani). Over the past year, they have worked on the link between more intense competition among goods producers and inflation. A second strand of work has focused on the relationship between ICT investment measurement issues and other variables used in the Bank's suite of econometric models.

  Further work is planned. Among the research projects approved by the MPC for 2001-02 is a sectoral analysis of productivity growth using raw data calculated specifically for this project by Cambridge Econometrics. The idea is to examine what can be learned from the inter-industry pattern of productivity growth. Further work on the ICT measurement issues and ICT investment will also take place.

  The Bank also tries to keep on top of the latest thinking on the "new economy", including seminars given inside the Bank by academic and other organisations (such as Cambridge Econometrics and Goldman Sachs), working party memberships (such as OECD and ONS groups looking at productivity measurement issues), management consultancies and industry based contacts of the Agents.


  On staff morale, the Committee asked how long the enquiry would take and when we expected the report back. The Bank has now received some feedback from the focus groups exercise and is considering possible management responses, including the need for follow-up work. There is at this stage no fixed timetable for this work although an early priority will be to tell staff how management intends to respond to what it has learned so far and how it intends to take the exercise further.

20 February 2001

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 28 March 2001