A Note on the Determinants of UK Business Cycles
AbstractIn their empirical analysis of Real Business Cycle models for the UK, Holland and Scott (1998) find that they cannot reject the proposition that movements in output are largely determined by 'productivity shocks' which are independent of demand side variables, such as interest rates. In this note we extend their work to allow for the impact of financial liberalisation and credit availability. We find that credit availability has had a significant impact on movements in output, and that, when these effects are controlled for, monetary policy variables, including interest rates, also cause output. This is consistent with the conventional view that demand-expansion was the cause of the boom of the late 1980s and appears to reject a RBC interpretation of output movements.
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Bibliographic InfoPaper provided by Exeter University, Department of Economics in its series Discussion Papers with number 9912.
Length: 10 pages
Date of creation: 1998
Date of revision:
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Postal: Streatham Court, Rennes Drive, Exeter EX4 4PU
Phone: (01392) 263218
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Web page: http://business-school.exeter.ac.uk/about/departments/economics/
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BUSINESS CYCLES ; MONETARY POLICY ; CREDIT;
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
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