Modelling UK Inflation over the Long Run

David Hendry

No 2, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: UK inflation varied greatly over 1865-1990, in response to many policy and exchange-rate regimes, two world wars and oil crises, and major legislative, and technological changes. It is modelled as responding to excess demands from all sectors of the economy: goods and services, factors of production, money, financial assets, foreign exchange, and government deficits, using indicator variables and commodity prices for special factors. Equilibrium-correction terms are developed for each of these. Variables representative of most theories of inflation mattered empirically over the sample, yielding an electric model which refutes any ‘single cause

Keywords: inflation; dynamic modelling; cointegration; structural breaks (search for similar items in EconPapers)
JEL-codes: E3 F43 (search for similar items in EconPapers)
Date: 2000-05-01
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Citations: View citations in EconPapers (2)

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