The UK Economy

2017 ◽  
Vol 240 ◽  
pp. F2-F2
Keyword(s):  
Interest Rates ◽  
Price Inflation ◽  
Fiscal Rule ◽  
Temporary Rise ◽  
The Uk

GDP is forecast to grow at a rate of 1.7 per cent this year and 1.9 per cent in 2018.Consumer price inflation is projected to peak at 3.4 per cent at the end of 2017.We expect the MPC to keep interest rates unchanged until mid-2019, despite the temporary rise in inflation.The current fiscal rule suggests further fiscal tightening is now needed in the next Parliament.

The UK Economy

2015 ◽  
Vol 234 ◽  
pp. F3-F3
Keyword(s):  
Interest Rates ◽  
Unemployment Rate ◽  
List Type ◽  
Price Inflation ◽  
Bank Of England ◽  
The Uk

The economy will grow by 2.4 per cent this year and 2.3 per cent in 2016.Unemployment rate to remain at 5¼ per cent throughout the rest of this year and next year.The rate of consumer price inflation rises from close to zero per cent in 2015 to 1.1 per cent in 2016.The Bank of England to raise interest rates at the start of 2016 and then gradually increase by 50 basis points a year, reaching 2 per cent by the end of 2018.

scholarly journals Was the Gibson Paradox for real? A Wicksellian study of the relationship between interest rates and prices

2014 ◽  
Vol 21 (2) ◽  
pp. 139-163 ◽  
Author(s):  
Jagjit S. Chadha ◽  
Morris Perlman
Keyword(s):  
Interest Rates ◽  
Positive Relationship ◽  
Formal Model ◽  
Natural Rate ◽  
Market Rate ◽  
Long Run ◽  
Advanced Economies ◽  
The Uk ◽  
Gibson Paradox ◽  
The Relationship

We examine the relationship between prices and interest rates for seven advanced economies in the period up to 1913, emphasising the UK. There is a significant long-run positive relationship between prices and interest rates for the core commodity standard countries. Keynes ([1930] 1971) labelled this positive relationship the ‘Gibson Paradox’. A number of theories have been put forward as possible explanations of the paradox but they do not fit the long-run pattern of the relationship. We find that a formal model in the spirit of Wicksell (1907) and Keynes ([1930] 1971) offers an explanation for the paradox: where the need to stabilise the banking sector's reserve ratio, in the presence of an uncertain ‘natural’ rate, can lead to persistent deviations of the market rate of interest from its ‘natural’ level and consequently long-run swings in the price level.

Interest rates in five macroeconomic models of the UK

1987 ◽  
Vol 4 (1) ◽  
pp. 19-64 ◽  
Author(s):  
Bill Easton ◽  
Kerry Patterson
Keyword(s):  
Interest Rates ◽  
Macroeconomic Models ◽  
The Uk

scholarly journals Present-biased Government, Creative Accounting and a Pitfall in Balanced Budget Rules

2021 ◽  
Author(s):  
Marcela De Castro-Valderrama
Keyword(s):  
General Equilibrium ◽  
Interest Rates ◽  
Equilibrium Model ◽  
Hyperbolic Discounting ◽  
Goods And Services ◽  
Creative Accounting ◽  
Welfare Losses ◽  
Fiscal Rule ◽  
Balanced Budget Rule ◽  
Balanced Budget

I propose a general equilibrium model with a quasi-hyperbolic discounting government that optimally decides upon using creative accounting in order to evaluate a balanced budget rule and a debt rule. In that context, I find that a binding balanced budget rule could fail to properly constrain public overindebtedness when government uses creative accounting while a debt rule is effective, since targets are set on total public liabilities. Results suggest that a balanced budget fiscal rule can also deteriorate welfare due to the higher interest rates derived from doing operations under the line, implying future expenditure cuts that are harmful for households, who value public goods and services. A debt rule is also preferred for its capacity to reverse some welfare losses generated by the present-biased government.

The Legacy of Economic Recession in Terms of Over-Indebtedness: A Framework and Review of the Evidence

2020 ◽  
Vol 20 (1) ◽  
pp. 111-124
Author(s):  
Heikki Hiilamo
Keyword(s):  
Interest Rates ◽  
Economic Crisis ◽  
Debt Crisis ◽  
Housing Price ◽  
Economic Recession ◽  
Oecd Countries ◽  
Mortgage Lending ◽  
Global Economic Crisis ◽  
Run Up ◽  
The Uk

With the expansion of credit, low interest rates and overly optimistic expectations about future economic and housing price developments, mortgage lending soared in most OECD countries in the run-up to the 2008 global economic crisis. The crisis revealed the hidden epidemic of over-indebtedness, which continues to overshadow the lives of millions in rich countries. In the wake of the global economic crisis, the household debt crisis led to worsening economic conditions and put pressure on government finances, which caused further income shocks in the form of austerity measures such as social welfare cuts and higher taxes. This article is based on a scoping review aimed at summarising and reflecting on the available literature. It analyses the effects of over-indebtedness on individuals and societies across six OECD countries: Finland, Germany, the Netherlands, Norway, the UK and the US.

A Long View of the UK Business Cycle

2002 ◽  
Vol 182 ◽  
pp. 72-89 ◽  
Author(s):  
Jagjit S. Chadha ◽  
Charles Nolan
Keyword(s):  
Business Cycle ◽  
Interest Rates ◽  
Dominant Role ◽  
Real Wages ◽  
Long Run ◽  
Nominal Interest Rates ◽  
Short Run ◽  
The Business Cycle ◽  
The Uk ◽  
External Sector

We outline a number of ‘stylised’ facts on the UK business cycle obtained from analysis of the long-run UK annual dataset. The findings are to some extent standard. Consumption and investment are pro-cyclical, with productivity playing a dominant role in explaining business cycle fluctuations at all horizons. Money neutrality obtains over the long run but there is clear evidence of non-neutrality over the short run, particularly at the business cycle frequencies. Business cycle relationships with the external sector via the real exchange rate and current account are notable. Postwar, the price level is counter-cyclical and real wages are pro-cyclical, as are nominal interest rates. Modern general equilibrium macroeconomic models capture many of these patterns.

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