An Examination of UK Business Cycle Fluctuations: 1871-1997

This paper examines UK business cycle fluctuations in 22 complete cycles since 1871. We catalogue the incidence and typical duration of UK business cycles. The summary statistics of the economy are explored, including the spectral density, sample covariation and cross spectrum of macroeconomic time series. The real exchange rate, total factor productivity, consumption and investment show systematic pro-cyclicality whereas the current account and long-term interest rates show counter-cyclicality. Real wages are broadly counter-cyclical pre-war and pro-cyclical post-war, conversely prices become counter-cyclical post-war. Consumption, investment and the current account show important leads over the business cycle and there is some evidence to suggest that real interest rates, real exchange rates and prices lag business cycles. Finally there is some evidence to suggest that post-war fluctuations have displayed greater coherence and reduced volatility.