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Input Price Shocks and the Slowdown in Economic Growth: The Case of U.K.Manufacturing

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Author Info
Michael Bruno
Jeffrey Sachs
Abstract

This paper provides a theoretical and empirical analysis of the effects of input price shocks on economic growth, with a focus on United Kingdom manufacturing in the 1970s. The theoretical model predicts a discrete decline in out- put and productivity after an input price rise, and a longer-run slowdown in productivity growth, real wage growth, and capital accumulation. These features characterize the United Kingdom and most other OECD economies after 1973. The empirical results confirm the important role of input prices in recent U.K. adjustment, but also point to an important role for other supply and demand factors.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0851.

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Date of creation: Feb 1982
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Handle: RePEc:nbr:nberwo:0851

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Michael Bruno & Jeffrey Sachs, 1982. "Energy and Resource Allocation: A Dynamic Model of the "Dutch Disease"," NBER Working Papers 0852, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Oulton, Nicholas, 1978. "Explaining aggregate investment in Britain : The importance of Tobin's Q," Economics Letters, Elsevier, vol. 1(3), pages 253-257. [Downloadable!] (restricted)
  3. Lawrence H. Summers, 1981. "Taxation and Corporate Investment: A q-Theory Approach," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(1981-1), pages 67-140. [Downloadable!]
  4. Jeffrey D. Sachs, 1979. "Wages, Profits, and Macroeconomic Adjustment: A Comparative Study," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1979-2), pages 269-332. [Downloadable!]
  5. James M. Poterba & Lawrence H. Summers, 1984. "Dividend Taxes, Corporate Investment, and "Q"," NBER Working Papers 0829, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Oulton, Nicholas, 1981. "Aggregate Investment and Tobin's Q: The Evidence from Britain," Oxford Economic Papers, Oxford University Press, vol. 33(2), pages 177-202, July. [Downloadable!] (restricted)
  7. Bruno, Michael & Sachs, Jeffrey, 1982. "Energy and Resource Allocation: A Dynamic Model of the "Dutch Disease"," Review of Economic Studies, Blackwell Publishing, vol. 49(5), pages 845-59, Special I. [Downloadable!] (restricted)
  8. Sargent, Thomas J, 1978. "Estimation of Dynamic Labor Demand Schedules under Rational Expectations," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 1009-44, December. [Downloadable!] (restricted)
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  9. Grubb, David B & Jackman, Richard A & Layard, Richard G, 1982. "Causes of the Current Stagflation," Review of Economic Studies, Blackwell Publishing, vol. 49(5), pages 707-30, Special I. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Willem H. Buiter, 1984. "Policy evaluation and design for continuous time linear rational expectations models: some recent development," NBER Technical Working Papers 0034, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Costas Milas, 2003. "Non-linear multivariate adjustment of the UK real exchange rate," City University Economics Discussion Papers 03/08, Department of Economics, City University, London. [Downloadable!]
  3. M. Ishaq Nadiri, 1986. "Price Inertia and Inflation: Evidence and Theoretical Rationale," NBER Working Papers 2022, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Gavin Cameron & Chris Wallace, 2002. "Macroeconomic Performance in the Bretton Woods Era, And After," Economics Series Working Papers 130, University of Oxford, Department of Economics. [Downloadable!]
    Other versions:
  5. Aliyu, Shehu Usman Rano, 2009. "Oil Price Shocks and the Macroeconomy of Nigeria: A Non-linear Approach," MPRA Paper 18726, University Library of Munich, Germany, revised 16 Nov 2009. [Downloadable!]
  6. Andreas Hornstein & Per Krusell, 1996. "Can Technology Improvements Cause Productivity Slowdowns?," NBER Chapters, in: NBER Macroeconomics Annual 1996, Volume 11, pages 209-276 National Bureau of Economic Research, Inc. [Downloadable!]
  7. Kilian, Lutz, 2005. "The Effects of Exogenous Oil Supply Shocks on Output and Inflation: Evidence from the G7 Countries," CEPR Discussion Papers 5404, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. Schubert, Stefan Franz, 2009. "Dynamic Effects of Oil Price Shocks and their Impact on the Current Account," MPRA Paper 16738, University Library of Munich, Germany. [Downloadable!]
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