|New MPC member must be professional economist|
By Willem Buiter, Charles Goodhart, DeAnne Julius and Sushil Wadhwani
Published: February 25 2006 02:00 | Last updated: February 25 2006 02:00
From Prof Willem Buiter, Prof Charles Goodhart, Dr DeAnne Julius and
Dr Sushil Wadhwani.
Sir, We are concerned that Gordon Brown, the chancellor, may be receiving advice to select someone who is not a professional economist to replace Stephen Nickell as external member of the Monetary Policy Committee, when Prof Nickell's term ends at the end of May.
While we do not advocate identikit external MPC members and welcome heterogeneity of backgrounds and perspectives, we believe that replacing Prof Nickell with a non-economist runs the risk that it would become harder for the external members to challenge the views of the excellent and experienced economists already at the Bank.
This would discourage consideration of alternative approaches to monetary policy and might unduly narrow the range of the discussion. The essential qualities a successful candidate for appointment as an external MPC member should have are independence, judgment and technical economic expertise.
We wish to draw attention here to the third key quality: technical expertise in economics. We recognize that one cannot expect every external MPC member to meet the benchmark set by Prof Nickell as president of the Royal Economic Society, fellow of the British Academy and of the Econometric Society, school professor of economics at the London School of Economics, former professor at the University of Oxford and future warden of Nuffield College, Oxford.
It does, however, serve as a useful reminder of what the right kind of external MPC member can contribute to the formulation and implementation of monetary policy in the UK.
Designing and implementing monetary policy is a technical economic subject, albeit a frustratingly imprecise one. It requires an understanding and command of economic theory, statistical methods and data.
The cause of effective monetary policy in the UK will be best served if Prof Nickell's successor is a professional economist of independent views and with a proven track record of technical economic research.
Former Members of the Monetary Policy Committee
The New York Times