NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Input Price Shocks and the Slowdown in Economic Growth: The Case of U.K.Manufacturing

Michael Bruno, Jeffrey Sachs

NBER Working Paper No. 851
Issued in February 1982
NBER Program(s):ITI, IFM

This paper provides a theoretical and empirical analysis of the effects of input price shocks on economic growth, with a focus on United Kingdom manufacturing in the 1970s. The theoretical model predicts a discrete decline in out- put and productivity after an input price rise, and a longer-run slowdown in productivity growth, real wage growth, and capital accumulation. These features characterize the United Kingdom and most other OECD economies after 1973. The empirical results confirm the important role of input prices in recent U.K. adjustment, but also point to an important role for other supply and demand factors.

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Document Object Identifier (DOI): 10.3386/w0851

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