Working Paper: CEPR ID: DP184
Authors: George Alogoskoufis
Abstract: In this paper I estimate and test a model of the effects of competitiveness, oil prices and government expenditure on output fluctuations in the United Kingdom. The model is based on the distinction between traded and non-traded goods, the latter being produced in both the private and public sectors. The model can account for the properties of the data, insofar as it cannot be rejected by either mis-specification or specification tests. On the basis of the estimates it appears that competitiveness and government expenditure have been equally important independent sources of output fluctuations, both before and after 1973. As one would have expected, however, real oil prices were the most important contributor in the post-1973 period.
Keywords: competitiveness; oil prices; business cycles
JEL Codes: 431
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Competitiveness (L11) | Output Fluctuations (E32) |
| Government Expenditure (H59) | Output Fluctuations (E32) |
| Real Oil Prices (Q31) | Output Fluctuations (E32) |
| Competitiveness + Government Expenditure (H59) | Output Fluctuations (E32) |
| Oil Prices (Q31) | Output Fluctuations (E32) |