The Bank of England Agenda for Research
23 Oct 2020
In this article, Stephen Millard discusses the new ‘Bank of England Agenda for Research’. He lays out the Bank’s current research themes within the overall agenda and discusses ways in which the academic community can engage with it.
In February 2015, the Bank first published an external research agenda. Five years later, and with a much changed economic landscape, we considered it time to take stock and think through where our research needed to go over the next five years. As a result, we recently launched the Bank of England Agenda for Research (BEAR), which went live on September 1st on our website.1 In order to launch the BEAR to the academic community, we sponsored a Special Session at the Central Bank Research Association (CeBRA) Conference on September 2nd where Viral Acharya (New York University), Diane Coyle (Cambridge University), Darrell Duffie (Stanford University) and Andrès Velasco (London School of Economics) each offered their thoughts. The session is available to watch on You Tube.2
The BEAR is based around five themes:
The Monetary Toolkit theme seeks to explore the new issues for monetary policymakers that have emerged over the past few years. This theme includes developing a better understanding of novel policy instruments, the challenges and strategic responses to the effective lower bound and incorporating heterogeneity into macro models. Another element of this theme is how central banks can and should use communication as a policy tool.
The Open Economy theme is focused on the changing nature of economic and financial linkages. This includes changes to trading networks induced by Brexit and changing supply chains, a deeper understanding of the role of capital flows, and the changing role of exchange rates. Another element of this theme is changes in, and the future prospects for, the international monetary system.
The Prudential Framework theme seeks to develop analytical apparatus to support regulatory decisions. This includes enhancing our set of macropudential models, better understanding the interaction between different policy tools, and work on non-bank financial actors. A final element of this theme is supervisory issues.
The Future of Finance theme centres on the issues raised by innovations and systemic developments in the financial sector. This includes the impact of new technologies such as Artificial Intelligence, Machine Learning and algorithmic investment on the financial sector, the deployment of this technology for supervisory purposes (Suptech) and the issues around Central Bank Digital Currency. A broader element of this theme is how the system as a whole can efficiently manage risks and allocate resources.
The Transformed World theme is focussed on underlying developments, beyond the realm of traditional economics which are relevant for central banks. This includes fundamental risks such as Covid-19 and climate change, understanding the so-called 'New Economy' and assessing the consequences of automation. Another element is better understanding the determinants of business dynamism.
Deepening academic engagement
As in 2015, an important reason for our advertising the BEAR to the academic community is our wish to engage and work with academic researchers on these issues. We actively encourage our researchers to work with researchers in the academic sector and offer academic economists the chance to engage with us. There are several ways for experienced researchers to get in in touch with us, set out in the new working with us3 section of the website. We also encourage PhD students to apply to our PhD internship programme where they have the opportunity to work closely with our researchers on a research project. We also have a Research Visitor Programme4 and the Houblon, Norman and George Fellowships5, which bring external academics into the Bank to work with us for a period of time. And in 2018 we launched a dedicated twitter handle, @BoE_Research6, providing the latest information on our research publications and activities.
We continue to engage more generally with the academic sector, particularly in the United Kingdom, through conferences and seminar series. Depsite the challenges of Covid-19 and remote working, these programmes have continued to work, and we very much value the exposure to external ideas and people that they bring.
The Bank is a member institution of the Centre for Macroeconomics7 and Ben Broadbent (Deputy Governor for Monetary Policy) chairs its Advisory Board. The Bank has long been a supporter of the Money, Macro and Finance Society (MMF)8 and Sir Dave Ramsden (Deputy Governor for Markets and Banking) is its Honorary President. And the Bank also continues to engage directly with UK university departments through its representative on the Conference of Heads of University Departments of Economics (CHUDE)9.
As the economy evolves, so do the Bank’s main areas of research interest. As part of the BEAR, the Bank will issue a set of annual priority topics within the five themes for each calendar year, setting out narrower and more-timely research questions. These priority topics are published as part of the BEAR document on the website.
Since first publishing a research agenda externally in 2015, Bank researchers — often in conjunction with researchers from outside the Bank — have pushed forward our economic knowledge within the themes laid out in that agenda. But we want to go further and that is why we have launched the Bank of England Agenda for Research with five new themes. There is still much to be done to increase our knowledge in those areas that are crucial to the Bank’s mission of ‘Promoting the good of the people of the United Kingdom by maintaining monetary and financial stability’. And the more we can continue to engage and work with the academic sector, the more our knowledge in these areas will grow. Please do get in touch if you’d like to know more about what we do, explore future collaborations, or participate in one of our programmes.