Nonstationary Shocks, Crises and Policy

Posted: 4 Aug 2012

See all articles by David Meenagh

David Meenagh

Cardiff University Business School

Patrick Minford

Cardiff University Business School; Centre for Economic Policy Research (CEPR)

Date Written: August 1, 2012

Abstract

A Real Business Cycle model of the UK is developed to account for the behaviour of UK nonstationary macro data. The model, when tested by the method of indirect inference, can explain the behaviour of main variables (GDP, real exchange rate, real interest rate). We use it to explain how 'crisis' and 'euphoria' are endemic in capitalist behaviour due to nonstationarity; and we draw some policy lessons.

Keywords: Banking Crisis, Banking Regulation, Bootstrap, Indirect Inference, Nonstationarity, Productivity, Real Business Cycle

JEL Classification: E32, F31, F41

Suggested Citation

Meenagh, David and Minford, Patrick, Nonstationary Shocks, Crises and Policy (August 1, 2012). Rivista Italiana degli Economisti, Vol. 2, August 2012. Available at SSRN: https://ssrn.com/abstract=2123106

David Meenagh (Contact Author)

Cardiff University Business School ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom
+44 29 2087 5198 (Phone)
+44 29 2087 4419 (Fax)

Patrick Minford

Cardiff University Business School ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom
+44 29 2087 5728 (Phone)
+44 29 2087 4419 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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