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

Robert Calvert Jump and Karsten Kohler ()

Explorations in Economic History, 2022, vol. 85, issue C

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 signs 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.

Keywords: Aggregate demand shocks; Aggregate supply shocks; Sign restrictions; Vector autoregressive model; New Keynesian model; Economic history (search for similar items in EconPapers)
JEL-codes: C50 C51 N10 N13 N14 (search for similar items in EconPapers)
Date: 2022
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Working Paper: A history of aggregate demand and supply shocks for the United Kingdom, 1900 to 2016 (2020) Downloads
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DOI: 10.1016/j.eeh.2022.101448

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