Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/65795
Authors: 
Fan, Jingwen
Minford, Patrick
Year of Publication: 
2011
Series/Report no.: 
Cardiff Economics Working Papers E2009/26
Abstract: 
We investigate whether the Fiscal Theory of the Price Level can explain UK inflation in the 1970s. We find that fiscal policy was non-Ricardian and money growth entirely endogenous in this period. The implied model of inflation is tested in two ways: for its trend using cointegration analysis and for its dynamics using the method of indirect inference. We find that it is not rejected. We also find that the model's errors indicate omitted dynamics which merit further research.
Subjects: 
UK Inflation
Fiscal Theory of the Price Level
Cointegration test
Bootstrap simulation
Indirect inference
Wald statistic
JEL: 
E31
E37
E62
E65
Document Type: 
Working Paper

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