Nominal inertia and shock persistence in UK business cycles


A structural VAR methodology is used for UK data to identify and map out the effects of innovations in the money supply, employment, output, wages and prices. Moreover, bands of two standard errors are computed for the impulse response functions so that comment may be made on the significance of the dynamic responses of the variables to the simulated shocks. This allows conclusions to be drawn on the persistence of shocks. Results suggest that output variation is largely determined by aggregate demand shocks over the business cycle frequency. Importantly, evidence is also found of rigidities in the form of price inertia and nominal wage stickiness.

Similar works

Full text


Research Papers in Economics

Provided original full text link
Last time updated on 7/6/2012

This paper was published in Research Papers in Economics.

Having an issue?

Is data on this page outdated, violates copyrights or anything else? Report the problem now and we will take corresponding actions after reviewing your request.