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The World Economy
Published online by Cambridge University Press: 26 March 2020
Extract
The prospects look good for either strong recovery or sustained growth of output throughout most of the OECD in 1995. The UK, US and Canada have grown at above trend rates this year after entering recessions in 1990 or 1991. Continental Europe followed them into recession in 1992 or 1993. These developments prompted a worldwide loosening of monetary policy which began in North America, where real short-term interest rates fell to around zero in 1992. The loosening of monetary policy in Europe (and the UK) came later and real short-term interest rates remain high at around 3 per cent, suggesting that the European upturn will be at a more moderate pace than elsewhere. This policy relaxation is a significant driving force behind the strength of output in the forecast.
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- Copyright © 1994 National Institute of Economic and Social Research
Footnotes
∗
We would like to thank Andrew Britton for helpful comments and Anne Perrin for statistical assistance. The forecast was prepared using our Global Econometric Model, NiGEM. The model is available from the Institute. It was developed by the Institute and is now jointly maintained with the London Business School. The forecast was completed on 8th November, 1994.
References
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