Modelling UK inflation, 1875-1991

UK inflation has varied greatly in response to many economic policy and exc hange-rate regime shifts, two world wars and two oil crises, as well as leg islative and technological changes. Inflation is modelled as responding to excess demands from all sectors of the economy: goods and services, factors of production, money, financial assets, foreign exchange, and government d eficits. Equilibrium-correction terms are developed for each of these over the sample. Indicator variables and commodity prices capture turbulent year s. Variables representative of most theories of inflation matter empiricall y, yielding an eclectic model inconsistent with any 'single-cause' explanat ion. Copyright (C) 2001 John Wiley & Sons, Ltd.