TY  - JOUR
AU  - Bordo,Michael D.
AU  - Dueker,Michael J.
AU  - Wheelock,David C.
TI  - Aggregate Price Shocks and Financial Stability: The United Kingdom 1796-1999
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8583
PY  - 2001
Y2  - November 2001
UR  - http://www.nber.org/papers/w8583
L1  - http://www.nber.org/papers/w8583.pdf
N1  - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu

Michael J. Dueker
Russell Investments
909 A Street
Tacoma, WA 98402
E-Mail: MDueker@Russell.com

David C. Wheelock
Research Division
Federal Reserve Bank of St. Louis
P.O. Box 442
St. Louis, MO 63166-0442
Tel: (314) 444-8570
Fax: (314) 444-8731
E-Mail: david.c.wheelock@stls.frb.org
AB  - This paper investigates the impact historically of aggregate price shocks on financial stability in the United Kingdom.  We construct an annual index of U.K. financial conditions for 1790-1999 and use a dynamic probit model to estimate the effect of aggregate price shocks on the index.  We find that price level shocks contributed significantly to financial instability during 1820-1931, and that inflation rate shocks contributed to instability during 1972-99.  Both the nature of aggregate price shocks and their impact depend on the existing monetary and financial regime, but price shocks historically have been a source of financial instability.
ER  -