A Millennium of UK Business Cycles: insights from a structural VAR analysis

Leonardo Ferreira, Haroon Mumtaz and Gabor Pinter

No 651, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: We study macroeconomic fluctuations in the United Kingdom over seven centuries (1271–2022) using a time-varying structural VAR with stochastic volatility. Business-cycle shocks are identified as the innovations maximising short-run output variance. Before 1900, these shocks display a stagflationary, supply-driven pattern consistent with wars, famines, and climate disruptions; post-1900 shocks become demand-driven, raising both output and inflation. Monetisation had large real effects in the sixteenth and seventeenth centuries, becoming increasingly inflationary thereafter. Output and inflation volatilities decline markedly over the full sample, suggesting a centuries-long Great Moderation. Overall, our results highlight how business cycle dynamics evolve with institutional, monetary, and structural transformations.

Date: 2026-08
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