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Modelling UK inflation, 1875-1991

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  • David F. Hendry

    (Economics Department, Oxford University, UK)

Abstract

UK inflation has varied greatly in response to many economic policy and exchange-rate regime shifts, two world wars and two oil crises, as well as legislative and technological changes. Inflation 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. Equilibrium-correction terms are developed for each of these over the sample. Indicator variables and commodity prices capture turbulent years. Variables representative of most theories of inflation matter empirically, yielding an eclectic model inconsistent with any 'single-cause' explanation. Copyright © 2001 John Wiley & Sons, Ltd.

Suggested Citation

  • David F. Hendry, 2001. "Modelling UK inflation, 1875-1991," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 255-275.
    • Handle: RePEc:jae:japmet:v:16:y:2001:i:3:p:255-275
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