A history of aggregate demand and supply shocks for the United Kingdom, 1900 to 2016.
- Resource Type
- Article
- Authors
- Calvert Jump, Robert; Kohler, Karsten
- Source
- Explorations in Economic History. Jul2022, Vol. 85, pN.PAG-N.PAG. 1p.
- Subject
- *AGGREGATE demand
*SUPPLY & demand
*ECONOMIC history
*AUTOREGRESSIVE models
*BARGAINING power
BRITISH history
- Language
- ISSN
- 0014-4983
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. [ABSTRACT FROM AUTHOR]