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A history of aggregate demand and supply shocks for the United Kingdom, 1900 to 2016

A history of aggregate demand and supply shocks for the United Kingdom, 1900 to 2016

Calvert Jump, Robert ORCID: 0000-0002-2967-512X and Kohler, Karsten (2022) A history of aggregate demand and supply shocks for the United Kingdom, 1900 to 2016. Explorations in Economic History, 85:101448. ISSN 0014-4983 (doi:https://doi.org/10.1016/j.eeh.2022.101448)

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Abstract

This paper presents a history of aggregate demand and supply shocks spanning 1900 -- 2016 for the United Kingdom. Sign restrictions derived from a workhorse Keynesian model are used to identify the sign of those shocks. We compare the 30 largest shocks implied by a vector autoregressive model in unemployment and inflation with the narrative historical record. Our approach provides a new perspective on well-known events in economic history. We highlight two episodes of particular interest: an aggregate supply shock in the late 1920s, which we attribute to changes in the bargaining power of labor, and positive aggregate demand shocks in the mid-1970s, which we attribute to fiscal policy.

Item Type: Article
Uncontrolled Keywords: aggregate demand shocks; aggregate supply shocks; sign restrictions; vector autoregressive model; New Keynesian model; economic history
Subjects: D History General and Old World > DA Great Britain
H Social Sciences > HC Economic History and Conditions
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Last Modified: 04 Jul 2022 13:15
URI: http://gala.gre.ac.uk/id/eprint/35361

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