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Title:Can the fiscal theory of the price level explain UK inflation in the 1970s? PDF Logo
Authors:Fan, Jingwen
Minford, Patrick
Issue Date: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
Document Type:Working Paper
Appears in Collections:Cardiff Economics Working Papers

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