Title: Impact of exchange rate and money supply on growth, inflation and interest rates in the UK

Authors: Keshab Bhattarai

Addresses: Business School, University of Hull, HU6 7RX, HULL, UK

Abstract: Growth rates, inflation and interest rates are determined simultaneously in the UK. Depreciations of Sterling pounds contribute to the growth by enhancing international competitiveness. Inflation from the growth of money, depreciation of Sterling and higher interest rates, impacts adversely on it. London being a hub of the global financial market higher interest rates are persistent and coexist with greater liquidity of the financial system, making money supply non-neutral in the short run as in Desai and Weber (1988), Fisher and Whitley (2000), Mellis and Whittaker (2000), Wallis (1969, 1989) for the UK and Sargent (1976) and Fair (1993).

Keywords: simultaneous equation modelling; macromodelling; growth rates; inflation; interest rates; exchange rates; money supply; United Kingdom; UK.

DOI: 10.1504/IJMEF.2011.043400

International Journal of Monetary Economics and Finance, 2011 Vol.4 No.4, pp.355 - 371

Available online: 27 Oct 2011 *

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