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Chapter I. The Home Economy

Published online by Cambridge University Press:  26 March 2020

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Abstract

The forecasts were prepared by Bob Anderton, Andrew Britton and Soterios Soteri, but they draw on the work of the whole team engaged in macroeconomic analysis and modelbuilding at the Institute. Part One of the chapter was written by Andrew Britton, Part Two by Bob Anderton.

Type
Articles
Information
National Institute Economic Review , Volume 135 , February 1991 , pp. 9 - 26
Copyright
Copyright © 1991 National Institute of Economic and Social Research

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References

Notes

(1) Nominal inertia in wage and price behaviour is described more fully in ‘Nominal inertia and Keynesian effects’, by Simon Wren-Lewis, National Institute Discussion Paper no. 174.

(2) Changes in competitiveness are not the only source of any differences in real output from the base case. Although, in our model, once the devaluation takes place both wage and price setters immediately change their expectations to be fully consistent with future outcomes, differences in the relative degree of inertia between wage and price setting behaviour will move the economy along the short-run Phillips curve.