Comparative Properties of Models of the UK Economy

1995 ◽  
Vol 153 ◽  
pp. 59-72 ◽  
Author(s):  
K.B. Church ◽  
P.R. Mitchell ◽  
P.N. Smith ◽  
K.F. Wallis
Keyword(s):  
Interest Rates ◽  
Policy Instruments ◽  
Policy Framework ◽  
Current Debate ◽  
Operating Environment ◽  
Simulation Experiments ◽  
Policy Choices ◽  
Inflation Targets ◽  
The Uk ◽  
Monetary And Fiscal Policy

This article analyses the properties of five major macroeconometric models of the UK economy in the light of the current debate over the setting of monetary and fiscal policy instruments. The broad objectives of current policy—sound public finances and low inflation—are reflected in a common operating environment for the models, with feedback rules for income tax and interest rates. Five standard simulation experiments demonstrate the consequences of these policy choices. The models disagree on several implications of this new policy framework, a critical parameter being the speed with which financial imbalances are rectified and inflation targets are met.

Comparative Properties of Models of the UK Economy

2000 ◽  
Vol 171 ◽  
pp. 106-122 ◽  
Author(s):  
Keith B. Church ◽  
Joanne E. Sault ◽  
Silvia Sgherri ◽  
Kenneth F. Wallis
Keyword(s):  
Interest Rates ◽  
Research Methods ◽  
Income Tax ◽  
Current Policy ◽  
Operating Environment ◽  
Simulation Experiments ◽  
Public Finances ◽  
Macroeconomic Modelling ◽  
The Uk

This article analyses the properties of five leading macroeconometric models of the UK economy, as revealed in four simulation experiments. These are carried out in a common operating environment that reflects the broad objectives of current policy — sound public finances and low inflation — by using feedback rules for income tax and interest rates. Developments in the structure of the models as revealed by the series of such exercises carried out during the lifetime of the ESRC Macroeconomic Modelling Bureau (1983–99) are described. The development of the research methods through which models' properties were elucidated and analysed is also reviewed.

scholarly journals Monetary Policy Normals, Future and Past

2017 ◽  
Vol 241 ◽  
pp. R5-R12 ◽  
Author(s):  
Peter Sinclair ◽  
William A. Allen
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Central Banks ◽  
Policy Framework ◽  
Current Policy ◽  
Macroprudential Policy ◽  
New Normal ◽  
Policy Measures ◽  
The Uk ◽  
Monetary Policy Framework

The paper looks at the ‘new normal’ in so many of the world's central banks, and specifically the UK. It examines the position of the monetary policy framework, instrument settings, the underlying models, unconventional policy measures, real interest rates, and the interface with macroprudential policy. It explores both the advantages and challenges involved in any move to return towards pre-crisis arrangements, and offers suggestions for possible ways in which current policy dilemmas might be resolved.

Comparative Properties of Models of the UK Economy

1997 ◽  
Vol 161 ◽  
pp. 91-110 ◽  
Author(s):  
Keith B. Church ◽  
Peter R. Mitchell ◽  
Joanne E. Sault ◽  
Kenneth F. Wallis
Keyword(s):  
Fiscal Policy ◽  
Income Tax ◽  
Policy Making ◽  
Inflation Rate ◽  
Maximum Effect ◽  
Monetary Shocks ◽  
Simulation Experiments ◽  
The Interest Rate ◽  
The Uk ◽  
Monetary And Fiscal Policy

This article analyses the properties of five leading macroeconometric models of the UK economy, in the light of the current discussion of monetary and fiscal policy-making. In simulation experiments, the interest rate and the basic rate of income tax are used to target the inflation rate and to ensure fiscal solvency. Our results show that monetary shocks soon affect the response of quantity variables, and fiscal shocks have monetary consequences, thus the operation of monetary and fiscal policy cannot be separated. Although the Bank of England's view is that it takes two years for monetary policy to have its maximum effect on inflation, our results show that this depends on the approach taken to the modelling of expectations.

scholarly journals Lessons from the 20 years of the Brazilian inflation targeting regime

2019 ◽  
Vol 66 (1) ◽  
pp. 1-23 ◽  
Author(s):  
Eliane Araújo ◽  
Philip Arestis
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Price Control ◽  
Current Debate ◽  
Policy Objective ◽  
Nominal Interest Rates ◽  
Inflation Targets ◽  
One Year

This paper analyzes the Brazilian experience with the inflation targeting regime (ITR) since its adoption in June 1999. The theoretical analysis starts by covering the New Consensus Macroeconomics (NCM) only policy, in which the ITR is the monetary policy recommendation. This discussion is then complemented first by the current debate in the international mainstream on the need for a flexible ITR that considers the effects of monetary policy on the economy and second by the heterodox discussion on the need to completely abandon the ITR. The discussion on the Brazilian experience and its comparison with international experiences show that Brazil is one of the few countries where the monetary policy objective is restricted to price control and where the horizon for returning inflation to the target is only one year. Within this institutional framework, the Brazilian economy under the ITR is marked by the maintenance of extremely high real and nominal interest rates and with difficulties in meeting the inflation targets. The price control obtained also did not generate the expected externalities in terms of economic growth and employment. After almost 20 years of adopting the ITR in Brazil, it has generated exaggerated contractionary pressures on the Brazilian economy, indicating the need for a thorough examination of monetary institutions in Brazil in order to resume economic growth with price stability and social equity.

Interpreting the Reagan Deficits

2017 ◽  
Author(s):  
Thomas J. Sargent
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Reagan Administration ◽  
Federal Budget ◽  
Ronald Reagan ◽  
Government Budget ◽  
Government Deficits ◽  
Tax Smoothing ◽  
The Government ◽  
Monetary And Fiscal Policy

This chapter examines the large net-of-interest deficits in the U.S. federal budget that have marked the administration of Ronald Reagan. It explains the fiscal and monetary actions observed during the Reagan administration as reflecting the optimal decisions of government policymakers. The discussion is based on an equation whose validity is granted by all competing theories of macroeconomics: the intertemporal government budget constraint. The chapter first considers the government budget balance and the optimal tax smoothing model of Robert Barro before analyzing monetary and fiscal policy during the Reagan years: a string of large annual net-of-interest government deficits accompanied by a monetary policy stance that has been tight, especially before February 1985, and even more so before August 1982. Indicators of tight monetary policy are high real interest rates on government debt and pretax yields that exceed the rate of economic growth.

scholarly journals Transformation of Sociocultural Integration Policy and Inherent Political Theories in the United Kingdom: A Way Forward

SAGE Open ◽  
2021 ◽  
Vol 11 (2) ◽  
pp. 215824402110074
Author(s):  
Samiul Parvez Ahmed ◽  
Sarwar Uddin Ahmed ◽  
Ikramul Hasan
Keyword(s):  
United Kingdom ◽  
Empirical Data ◽  
Policy Instruments ◽  
Diversity Management ◽  
Policy Instrument ◽  
Management Policy ◽  
Policy Framework ◽  
Theoretical Argument ◽  
Integration Policy ◽  
The United Kingdom

The contemporary integration policies (Community Cohesion Agenda [CCA]) of the United Kingdom have been criticized for their foundational weaknesses, conceptual inadequacies, myopic views with regard to the complexity of the issue, lack of evidence, and so on. Vast majority of the studies conducted to verify this discourse have been done in the line of theoretical arguments of diversity management rather than exploring their connections to a target community in reality. This study aims at establishing a linkage between the growing theoretical arguments of the integration discourse with empirical data in light of the policy framework of the CCA. We have selected the fastest growing Bangladeshi community of the CCA-adapted Aston City of Birmingham as the representative group of the ethnic minority communities of the United Kingdom. Qualitative data collection approach has been followed, where primary in-depth interviews were conducted on various policy actors, social workers, faith leaders, and Bangladeshi residents of Aston. The entire policy instrument, starting from its broad purposes to operational strategies, has been severely challenged by both residents of the community and relevant policy-implementing bodies in Aston. CCA policies appear to be largely inclined toward the interculturalism/communitarianism ideology rather than to multiculturalism. However, the empirical evidence shows that the need for multiculturalism, to be more specific—Bristol School of Multiculturalism, as a political theory remains in the integration discourse in the context of the United Kingdom. Findings are expected to have implications on practitioners and policy makers in designing diversity management policy instruments by having a wider synthesized view on both theoretical argument and empirical data.

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

‘Feels like I'm doing it on my own’: Examining the Synchronicity between Policy Responses and the Circumstances and Experiences of Mortgage Borrowers in Arrears

2011 ◽  
Vol 11 (1) ◽  
pp. 117-129 ◽  
Author(s):  
Alison Wallace
Keyword(s):  
Policy Framework ◽  
State Support ◽  
Safety Nets ◽  
Mortgage Debt ◽  
Policy Responses ◽  
The Uk ◽  
New Evidence

The previous administration introduced several measures to prevent mortgage possessions, some of which were modestly effective. However, these hastily introduced initiatives were insufficient to bridge the gap between a fragmented policy framework and borrowers’ circumstances and experiences of managing mortgage debt. The present restructuring of welfare and regulation represents a unique window to address these long-standing policy omissions in relation to sustainable homeownership in the UK. However, in the context of weakening state support, it is uncertain how or indeed whether, the opportunity to reform mortgage safety nets will be grasped. This article reflects upon the continuing misalignment of policy with borrowers’ circumstances and experiences of mortgage arrears using new evidence from this downturn.

The UK and EMU: Choosing the Regime

2002 ◽  
Vol 180 ◽  
pp. 54-71 ◽  
Author(s):  
Ray Barrell
Keyword(s):  
Euro Area ◽  
Policy Framework ◽  
Medium Term ◽  
Fiscal Regimes ◽  
The Stability ◽  
The Uk

The UK has to make a decision on membership of EMU in the next two years. The monetary and fiscal regimes in the Euro Area and in the UK do not differ greatly. However, we argue that membership of EMU will increase the stability of the economy and the credibility of the policy framework, and hence will enhance the prospects for growth and higher incomes and employment. There appear to be no major problems associated with joining EMU at around 1.50 euros to the pound, although there are risks to the UK if the euro appreciates against the dollar after we have entered. However, the costs associated with this risk have to be offset against the probability of the significant output gains that could come from EMU membership in the medium term.

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