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Maximising the Value of Economic Analysis for Central Banks
4-day intensive residential programme, 2 –
6 April 2006
Venue: Cumberland Lodge The Great Park, Windsor
Course Chairman: David Mayes, Adviser to the Board, Bank of Finland
Series adviser: Charles Goodhart, CBE
Professor Emeritus, London School of Economics, Financial Markets Group
Details of how to register
are here
MAXIMISING THE VALUE OF ECONOMIC ANALYSIS FOR CENTRAL BANKS
Economic analysis forms the backbone of modern central bank policymaking and plays a crucial role in informing markets and the public. Producing timely and understandable analysis of national and international economic indicators – and their interaction – is vital to the credibility and independence of the central bank.
To meet these demands senior managers need to identify relevant topics, prioritise them and develop a coherent programme of research. Managers also need to plan and organise adequate financial and human resources to deliver results to the satisfaction of policymaking committees and boards.
This training course/seminar provides an opportunity to review and assess the whole range of economic input into policymaking in a central bank, the various ways in which central banks organise this function at present and the conclusions that can be drawn for the optimal ways of organising it in future, given the specific circumstances of individual institutions. This assessment will cover not only the central roles in the process of monetary-policy making and assuring financial stability, but also the efficient conduct of market operations, including reserve management, and risk management throughout the institution. In all such areas, the input of economists and economic modelling is indispensable.
In designing this course, Central Banking is building on its well-established annual training course/seminar series held annually at Cambridge. Over the last seven years, the series have attracted over 1,000 central bankers and financial regulators from 95 different countries. This is the fourth series of training courses/seminars to be held in the regal setting of Cumberland Lodge, located in the heart of the famously picturesque Windsor Great Park.
The course reflects the independent standing of the course organisers, which allows and positively encourages the free and open discussion of important and sensitive issues. At the same time, the limited size of the groups allows each individual to contribute fully to discussions and derive maximum benefit from participation. Also, the residential nature of the course provides ample opportunity for informal discussion outside the scheduled sessions.
We look forward to welcoming you to Windsor.
Yours sincerely,
William Clarke, PhD, CBE
Chairman, Central Banking Publications
Chairman: Professor David Mayes, Adviser to the Board, Bank of Finland
Identifying
the challenges facing a central bank’s economic advisory function
David
Mayes
Adviser to the Board, Bank of Finland
Changing expectations of economics
and research departments impose numerous and competing demands as those
who work in them. This opening session will review how different central
banks respond. Professor Mayes will survey the work of economists in
different central banking roles: monetary policy and market operations;
financial stability; reserve and liability management and risk management.
The aim is to lay the groundwork for later sessions, allowing delegates
to formulate focused programmes, tailored to their particular requirements,
to achieve these goals.
The job of the research department: a governor’s view
Marko
Skreb
Former Governor, Croatian National
Bank
What do governors and policymakers
expect from the research department? In this opening session, Dr Skreb
draws on his experience of leading a central bank to address the demands
that boards and policymakers place on research functions, and in his
experience how these have best been met. For heads of research, there
will be considerable lag between a request for a study by a board member
and its publication. How can research departments stay ahead of the
game? In this session, the group will review how different central banks
are now responding to these challenges.
The organisation and structure of the
economics/research department(s)
Anders
Vredin
Head of Monetary Policy Department,
Sveriges Riksbank
In this session, the speakers will
discuss the place of the economics department within the bank’s
organisation, its mandate and its resources. As well as publishing statistics,
central banks must deliver authoritative research and analysis. Central
banks face competition from private, public and official sectors in
attracting and retaining economists. This session addresses the effective
management and allocation of human resources in order to structure programmes
of research to achieve goals set by policymakers.
Measuring performance
Workshop sessions
In a final session, participants
will split into smaller working groups to consider how to assess the
performance and quality of economic research and to examine some of
the wider issues of the economist’s role in the central bank.
Chairman: Professor David Mayes, Adviser to the Board, Bank of Finland
Maximiano Pinheiro
Bank of Portugal
In this session the speaker will focus on the central role of modelling. Central banks are expected to demonstrate high levels of competence and professionalism in conducting the required analysis. Indeed, they should act as centres of excellence for understanding and research of their economies, and senior managers must ensure that the econometric skills of the staff are being put to good use. The speaker will discuss advances in the latest thinking in macroeconomic modelling, drawing on changes ta central bank's economic models.
Producing forecasts, projections and surveys
David Mayes
Adviser to the Board, Bank of Finland
The development of inflation targetting as a monetary policy framework depends on projections or forecasts for economic variables. Professor Mayes will illustrate how central banks have approached this technical challenge and, crucially, how they have explained their analysis to policymakers and the public. The session will also review more sophisticated treatments of risk and uncertainty including scenario building, and the management of competing forecasts.
Enhancing data sources
Speaker to be confirmed
Consistent and reliable data series are the foundation for any economic analysis, especially in an environment of forward-looking policymaking such as inflation targeting. However, central bank economists face many challenges in dealing with data that is backward looking, often published with a lag and can be subject to frequent and significant revisions. This session draws on a variety of examples to illustrate what the economics function can do supplement or improve existing data through surveys or generation of real-time information. The group will also consider how data collection can be managed to make the best use of resources.
Constructing a framework for effective modelling
Workshop
In this workshop session, participants will split into smaller working groups to discuss effective synthesis of modelling techniques as well as how to encourage innovative approaches to understanding national economies.
Chairman: Professor David Mayes Adviser to the Board, Bank of Finland
Presenting
to policymakers
Speaker to
be confirmed
For a central bank economist, presentations
to board members or executives prior to a policymaking decision are challenging.
Faced with an audience which may include some without strong “technical”
backgrounds, how can research staff present information in a format that
policymakers can use? This session considers the most effective ways to
present information to policymakers and examines how research can be directed
to better aid the policymaking process.
Identifying and assessing risks
in financial sectors
Thorvald
Grung Moe
Special Adviser, Financial Stability,
Norges Bank
The role of economists in supporting
the central bank’s responsibilities in the area of financial stability
is not as clear-cut as it is in the area of monetary policy. With no commonly
accepted definition or quantified target for “financial stability”,
the speaker will discuss where research should be focused to generate
the most useful results in terms of policy advice.
Towards a framework for financial stability
Andrew
Haldane
Head of Market Infrastructure Division,
Bank of England, invited
Are central banks close to developing a framework for
financial stability policymaking? In this session, Andrew Haldane will
discuss the latest lines of research in the area of financial stability,
approaches to the modelling of crises and policy tools for financial stability.
A focus of this session will be on how measure and assess the quality
of the output of the central bank’s economists in this challenging
area.
Supporting policymaking
Workshop sessions
In a final session, participants will split into smaller
working groups to consider the major topics and issues raised in the day’s
discussion of how to support the work of policymakers.
Role of economists in market operations
John
Nugée
Head of Official Institutions Group,
State Street Global Advisors Ltd
This session discusses the role
of economists in operational aspects of a central bank’s tasks.
The presenter, formally executive director responsible for reserves at
the HKMA and head of reserve management at the Bank of England, focuses
on the expectations that the reserve managers, dealers and those more
in the operations have of economic research and how interaction and coordination
can be managed.
How central banks should talk
Speaker to be confirmed
In an age of transparent central banking, "black
box" explanations of policymaking are no longer possible. Written
and spoken communication now form essential parts of policymaking in a
central bank. Indeed its credibility rests on it. In this session, the
group will evaluate different approaches to releasing information: how
much detail about forecasts and the models underlying should be made public?
What type of reports should a central bank produce? What they should say,
and how? Should central banks, for example, comment on the macroeconomic
impact of asset prices?
Course Conclusion
The day and the course will
conclude with a session led by the chairman drawing in the main points
of the course.
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