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Non Stationary Shocks, Crises and Policy

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  • David Meenagh
  • Patrick Minford

Abstract

A Real Business Cycle model of the UK is developed to account for the behaviour of UK non-stationary macro data. The model, when tested by the method of indirect inference, can explain the behaviour of main variables (GDP, real exchange rate, real interest rate). We use it to explain how "crisis" and "euphoria" are endemic in capitalist behaviour due to Non-stationarity; and we draw some policylessons.

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  • David Meenagh & Patrick Minford, 2012. "Non Stationary Shocks, Crises and Policy," Rivista italiana degli economisti, Società editrice il Mulino, issue 2, pages 191-224.
    • Handle: RePEc:mul:jqat1f:doi:10.1427/37494:y:2012:i:2:p:191-224
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