Star variables, such as potential output and the neutral real interest rate, are fundamental to economic policymaking but challenging to identify due to their latent nature. Buncic, Pagan, and Robinson (2023) highlight the difficulty of identifying star variables within short macroeconomic...

There has been a long-running debate in international macroeconomics about whether there is purchasing power parity (PPP) in the data. But while the literature has been dominated by reduced-form evidence focusing on the real exchange rate dynamics including its long-run behaviour, little...

This paper examines the long-term relationship between economic growth and inequality in the UK using an endogenous growth model with heterogeneous agents. The model links entrepreneurial incentives to individual wealth, showing how wealth distribution endogenously influences growth. Estimation...

This paper builds on Yang et al (2021) which analysed the effect of wealth inequality on UK economic growth in recent decades with a heterogeneous-agent growth model where agents can enhance individual productivity growth by undertaking entrepreneurship. In this supplementary note we examine...

We implement a quantitative empirical test of the fiscal theory of the price level (FTPL) model via indirect inference, comparing it to a standard New Keynesian model. The FTPL alternative creates a serious instability problem because it triggers a 'doom loop'in which inflation pushes up...

In this short paper we review the intellectual history of indirect inference as a methodology in its progress from an informal method for evaluating early models of representative agents to formally testing DSGE models of the economy; and we have considered the issues that can arise in carrying...