Supply-Side Policy and Economic Growth: A Case Study of the UK
Lucy Minford () and
David Meenagh
Additional contact information
Lucy Minford: Swansea University
Authors registered in the RePEc Author Service: Lucy Barros
Open Economies Review, 2020, vol. 31, issue 1, No 7, 159-193
Abstract:
Abstract This paper investigates the potential for a causal relationship between certain supply-side policies and UK output and productivity growth between 1970 and 2009. We outline an open economy DSGE model of the UK in which productivity growth is determined by the tax and regulatory environment faced by firms. This model is estimated and tested using simulation-based econometric methods (indirect inference). Using Monte Carlo methods we investigate the power of the test as we apply it, allowing the construction of uncertainty bounds for the structural parameter estimates and hence for the quantitative implications of policy reform in the estimated model. We also test and confirm the model’s identification, thus ensuring that the direction of causality is unambiguously from policy to productivity. The results offer robust empirical evidence that temporary changes in policies underpinning the business environment can have sizeable effects on economic growth over the medium term.
Keywords: Taxation; Regulation; Labour market regulation; Economic growth; DSGE; Indirect inference (search for similar items in EconPapers)
JEL-codes: E02 O4 O43 O5 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
http://link.springer.com/10.1007/s11079-019-09536-8 Abstract (text/html)
Access to full text is restricted to subscribers.
Related works:
Working Paper: Supply-side policy and economic growth: A case study of the UK (2018) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:kap:openec:v:31:y:2020:i:1:d:10.1007_s11079-019-09536-8
Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11079/PS2
DOI: 10.1007/s11079-019-09536-8
Access Statistics for this article
Open Economies Review is currently edited by G.S. Tavlas
More articles in Open Economies Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().