Discussion Paper Details
Please find the details for DP7630 in an easy to copy and paste format below:
Title: Can the Fiscal Theory of the price level explain UK inflation in the 1970s?
Author(s): Jingwen Fan and Patrick Minford
Publication Date: January 2010
Keyword(s): Bootstrap simulation, Fiscal Theory of the Price Level, Indirect inference, UK Inflation and Wald statistic
Programme Area(s): International Macroeconomics
Abstract: We investigate whether the Fiscal Theory of the Price Level can deliver a reasonable explanation for UK inflation in the 1970s, a period in which the government greatly increased public spending without raising taxes and monetary policy was accommodative. The model is tested for its implied cointegration between inflation and government spending and for its dynamics by using the method of indirect inference, under which the model?s simulated behaviour is compared with the inflation time-series process. We find that the model is accepted in both respects.
For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7630
Fan, J and Minford, P. 2010. 'Can the Fiscal Theory of the price level explain UK inflation in the 1970s?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7630