Structural Modelling of the UK Economy within a VAR Framework using Quarterly and Monthly Data

1. To estimate a small quarterly macroeconomic model of the UK, based on a VAR model of a number of ‘core’ macroeconomic variables, and employing recently developed econometric techniques to test and impose restrictions on the long run relationships of the model. Also, to analyse the short run dynamic properties of the model and to investigate the role of exogenous variables, all with a view to analysing specific aspects of the way in which the UK macroeconomy functions. 2. To evaluate a limited number of economic theories within the context of a small but complete macromodel. 3. To construct a monthly model of the UK economy corresponding as far as possible to the quarterly model. 4. To undertake some policy evaluation exercises, and to investigate the sources of shocks which generate fluctuations in real and nominal macro-variables in the UK economy and the mechanisms by which the effects of different shocks are propagated across different macroeconomic variables and over time.