16  Recent summaries of the literature are contained in Deutsche Bundesbank (2016) and Monnin (2017). The Bank of England working paper on this topic (Bunn, Pugh and Yeates (2018) on which this speech draws) contains a good survey of the recent literature. 17 April 2017 NMG Consulting survey of households, as discussed in Bunn et al (2018). 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  Assessing the Quantitative Impact of Monetary Policy  We develop a quantitative framework to measure the impact of monetary policy on the economy as a whole and on different cohorts within it. We use the UK as a case study. The framework draws heavily on recent research by Bank of England staff, Phil Bunn, Alice Pugh and Chris Yeates. Their working paper contains 18  full details of the exercise, which involves three broad steps. As with any quantitative analysis, there are of  course uncertainties and confidence intervals around the results. As such, the broad qualitative conclusions are probably worth emphasising more than any precise figures. Step One: Starting Distributions  The starting point is an initial set of distributions for the variables of interest, looking across a representative sample of households. For this exercise, data are taken primarily from the Wealth and Asset Survey (WAS), a biennial survey of UK households’ assets and debts. 19  Specifically, we focus on a fixed panel of 10,000  households across 4 waves of this survey between 2006-08 and 2012-14.
Some households will have seen these benefits through higher employment, others through lower debt payments, others still through higher wealth. Even if people observed and understood all of these channels, their lived experience would have been quite different. In practice, we know people’s understanding of these channels is partial and imperfect. Some channels are hard to observe or take time to take effect, such as the quantitatively important effect of monetary policy in boosting jobs and hence household labour income. It will have been difficult for households to tie the effects of looser monetary policy to their improved job prospects, given the long lags in transmission. People’s subjective sense of well-being might also be influenced by more than their percentage gains. How people’s gains, in money terms, compare with others’ monetary gains might also matter. In experimental and real-world settings, these relativities often matter to people’s sense of fairness and hence well-being. 30  With that in mind, we now turn to a fully-fledged welfare analysis of the impact of monetary policy. Assessing the Welfare Impact of Monetary Policy  Assessing the impact of monetary policy on the welfare of different cohorts is interesting for several reasons. First, it is the sum of individuals’ subjective well-being – that is, social welfare – that ought ultimately to matter for policymakers, even though policymakers’ legal mandates are typically cast in terms of a set of more objective macro-economic measures, such as inflation and employment.