Input Price Shocks and the Slowdown in Economic Growth: The Case of U.K. Manufacturing
This paper provides a theoretical and empirical analysis of the effects of input price shocks on economic growth, with a focus on United Kingdom manufacturing in the 1970s. The theoretical model predicts a discrete decline in out- put and productivity after an input price rise, and a longer-run slowdown in productivity growth, real wage growth, and capital accumulation. These features characterize the United Kingdom and most other OECD economies after 1973. The empirical results confirm the important role of input prices in recent U.K. adjustment, but also point to an important role for other supply and demand factors.
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More About This Work
- Academic Units
- Earth Institute
- National Bureau of Economic Research
- NBER Working Paper, 851
- Published Here
- September 25, 2009
Presented at the Conference on Unemployment, Newnham College, Cambridge, July 1981. Published in Review of Economic Studies, vol. 49, no. 5 (1982), pp. 679-705.