Garry Young’s research while affiliated with Bank of England and other places

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Publications (68)


The UK Productivity Puzzle 2008-13: Evidence from British Businesses
  • Article

January 2015

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8 Reads

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14 Citations

SSRN Electronic Journal

Rebecca Riley

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Chiara Rosazza Bondibene

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Garry Young

In many larger advanced economies labour productivity growth slowed sharply and remained subdued for years after the credit crisis of 2007/08. Nowhere was this more obvious than in the UK. We examine the dynamics of productivity among British businesses that lie behind this stagnation. The most striking feature is the widespread weakness in total factor productivity within firms, pointing to the importance of a common factor in explaining productivity weakness. In addition, we find that the positive correlation between surviving firms' employment growth and their relative productivity ranking broke down after 2007/08, as would be expected if an adverse credit supply shock had caused inefficiencies in resource allocation across firms. Indeed, during the immediate recession years 2008/09, this shift was most apparent in sectors with many small and bank dependent businesses. But subsequently, while the contribution of external reallocation to aggregate productivity growth in 2010/13 was smaller than in previous years, this was not obviously associated with sectoral bank dependence. We illustrate the sensitivity of these findings to the choice of decomposition method.



The Financial Crisis, Bank Lending and UK Productivity: Sectoral and Firm-Level Evidence

April 2014

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48 Reads

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15 Citations

National Institute Economic Review

This paper assesses the evidence and investigates some of the mechanisms by which the most recent banking sector crisis might have affected the supply side of the UK economy. We find clear evidence that the banking sector crisis affected credit supply to businesses and caused bank lending to decline. But we do not find much evidence of the heterogeneity in performance between different industrial sectors that would have been expected if banking sector impairment had been the key factor holding back productivity growth. Consistent with this we do not find strong evidence that a lack of reallocation of resources across businesses has been a substantial drag on productivity growth.


Understanding the Weakness of Bank Lending

December 2010

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354 Reads

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22 Citations

The flow of new bank lending to UK households and businesses fell sharply following the start of the global financial crisis in mid-2007. That provoked an ongoing debate about the extent to which the sustained weakening of bank lending was caused by a fall in demand for credit, or a fall in supply. While it is difficult to disentangle the effects of shifts in credit demand and supply, this article finds evidence of a substantial and persistent tightening in credit supply conditions from mid-2007. But independently weaker credit demand — probably associated with the impact of the global financial crisis — is also likely to have contributed to the weakness in bank lending.


The Financial Position of British Households: Evidence from the 2008 NMG Research Survey

December 2008

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11 Reads

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9 Citations

The financial position of British households has been affected by a number of developments over the past year, including sharp fluctuations in food and energy bills, falling house prices and tighter credit conditions. Evidence from the latest survey of households, carried out for the Bank by NMG Research in late September and early October, shows how these and other changes have impacted on household budgets and spending decisions. The typical household reported that the income it had available after meeting household bills had fallen over the past year and that it had saved less than it had expected. Some households had been put off spending by tighter credit conditions, and more households were finding their debts to be a burden than in similar surveys carried out since the mid-1990s. But despite the greater pressures on household finances, only 3% of the households surveyed had so far fallen behind on bill or debt payments. Lower house prices had reduced the housing equity of homeowners.


The impact of unsecured debt on financial pressure among British households

August 2008

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87 Reads

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54 Citations

Applied Financial Economics

This article uses the 1995 and 2000 waves of the British Household Panel Survey to examine how a self-reported indicator of financial pressure is related to household finances and other characteristics. Using an ordered-logit model we find that the burden of debt is affected by the unsecured debt-income ratio, mortgage income gearing, financial wealth, health, ethnicity and marital status.


On the Sources of Macroeconomic Stability

January 2008

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16 Reads

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9 Citations

In September 2007, the Bank of England hosted an international conference on the sources of macroeconomic stability. This article summarises some of the ideas and debates that were raised at the conference. It focuses particularly on the role of monetary policy in fostering macroeconomic stability and draws out some of the implications for policy and research. These issues are relevant to the current economic situation. The UK economy is likely to be better able to withstand the turbulence it is currently experiencing if the previous prolonged period of stability was caused by sustainable structural change and an improved policy framework.


Household Debt and Spending: Results from the 2007 NMG Research Survey

December 2007

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15 Reads

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5 Citations

This article summarises the main results from the latest survey carried out for the Bank by NMG Research in late September about the state of household finances. There was a slight increase in financial pressure among renters, continuing a recent trend. Mortgagors appeared not to have experienced any increased difficulty despite the increase in policy rates over the year. Partly, this reflects the widespread use of fixed-rate mortgage products. Credit conditions appeared to have tightened a little for renters, but loosened for mortgagors over the year to September.


The Role of Household Debt and Balance Sheets in the Monetary Transmission Mechanism

April 2007

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47 Reads

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21 Citations

There is considerable uncertainty about the effect of household debt on the macroeconomy and its role in the monetary transmission mechanism. This article summarises conclusions from recent Bank of England research aimed at shedding light on this issue. It argues that the extent to which levels of household debt affect the outlook for the economy and the way in which the economy responds to unexpected developments, depends on the circumstances of individual borrowers and lenders, as well as wider economic conditions. Recent evidence suggests that there has been little difference in the amount by which the spending of high and low debt households has responded to changes in those households' financial position. This is likely to be because the benign economic environment and favourable lending conditions have made it easier for households to smooth over adverse shocks. Nevertheless, adverse interactions between debt, house prices and consumption could arise in other circumstances. As such, there is a need to keep this situation under review by continued monitoring of household and lender balance sheets.


Financial Pressure and Balance Sheet Adjustment by Firms

February 2007

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46 Reads

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17 Citations

Oxford Bulletin of Economics & Statistics

This paper examines the financial policies and balance sheet adjustment of companies. Using a large panel of UK-listed firms we consider how companies resolve pressures on their balance sheet, estimating models for dividends, new equity issuance and investment. The results indicate that companies resolve balance sheet pressures by each of these means. Financial policies, through dividends and new equity issuance, and real investment decisions, respond to the underlying level of debt and the borrowing cost of servicing that debt. Dividends are estimated to be slow to adjust in the short run. Copyright 2007 Blackwell Publishing Ltd.


Citations (47)


... Second, our study sheds light on the potential reasons of the under-performance of European economies in times of rapid technological change, a topic that has long been debated by academics and policymakers due to the sluggish firm productivity trend and the deteriorating business dynamism (ECB, 2021;Biondi et al., 2022). This can be attributed to a combination of various factors, such as macroeconomic uncertainty, ongoing processes of structural change and weaknesses in international markets (Riley et al., 2015;Coyle et al., 2023). The effect of these factors can add to the disruptive impact of technological change, and lead to an increase in misallocation, observed in sectors in which technology has been expanding more rapidly (Pellegrino and Zingales, 2017;Calligaris et al., 2018). ...

Reference:

Productivity Performance, Distance to Frontier and Ai Innovation: Firm-Level Evidence from Europe
The UK Productivity Puzzle 2008-13: Evidence from British Businesses
  • Citing Article
  • January 2015

SSRN Electronic Journal

... In (UK), Riley and Young (2014) displayed reasons in clarifying the droop in UK"s profitability development as an after effects of credit requirements by banks, especially outcome of the ongoing cash emergency that went about as a shortcoming towards efficiency development. Sabina and Mahomet (2015) noticed that the determinants of banks" money related execution examination among nationalized and local private issue banks of Asian nation were affected by quality use and in operation potency have significant positive effect on banks' financial performance while credit chance has imperative negative effect. ...

Financial Crisis and Economic Performance: Introduction
  • Citing Article
  • May 2014

National Institute Economic Review

... There's also the Supply or Cost-push inflation theory, which claims that inflation is driven by supply-side factors like import or raw material prices, unit labor costs, and other costs of production [40]. ...

The Financial Crisis, Bank Lending and UK Productivity: Sectoral and Firm-Level Evidence
  • Citing Article
  • April 2014

National Institute Economic Review

... The approach to modelling unemployment outflows in this analysis was based on the notion of a 'hiring function' (Layard, Nickell and Jackman, 1991), also referred to as a 'matching function' (Disney et al, 1992;Lehmann, 1993, Dor et al, 1997. This is a commonly used approach and was used, for instance, to estimate the impact of New Deal for Young People (Anderton, Riley and Young, 1999;Riley and Young, 2001). ...

The New Deal for Young People: Early Findings from the Pathfinder Areas
  • Citing Article
  • January 1999

... The ¢rst study using these data was published by the IMF (Kodres, 2000). Using this source, Kneller and Young (2001) estimate the impact of computer hardware investment on UK GDP potential and Oulton (2001) analyses the e¡ect of ICT and non-ICT investment. This source provided the basic data for the present study and is described in the Appendix. ...

The New British Economy
  • Citing Article
  • July 2001

National Institute Economic Review

... Note in particular that the last point means that, under the PSNB, the sale of equity securities is treated in the same way as the sale of government debt securities for the purposes of computing fiscal balance. 9 However,Robinson (2001) notes that net investment through PFIs has been a relatively small fraction of total net public investment in the UK, so that the controversy over accounting treatment of such projects is of little import for the operation of the fiscal rules. It seems likely that the government's stated commitment to PFIs reflects a belief in their efficacy as a means of delivering public services, rather than as a device for evading fiscal rules.10 ...

The State of the Public Finances
  • Citing Article
  • August 1993

National Institute Economic Review

... By the mid 1960s, the percentage of national income devoted to health was greater in competitor countries (OECD 1977). Given the importance of the UK's balance of payments and the subsequent public expenditure and fiscal stability objectives at this time (Pain and Young 1996), it was most unlikely that substantial step change increases in resources of the scale required for significant capital programmes would be made available. ...

The UK Public Finances: Past Experience and Future Prospects
  • Citing Article
  • October 1996

National Institute Economic Review

...  Long-term (that is, over six months) youth unemployment in Great Britain had been reduced by approximately 30,000 (or 40 percent) over the period April 1989 to April 1999 (including deadweight) (Anderton et al., 1999). Later estimates covering the first two years of the program to March 2000 imply a reduction in long-term youth unemployment by 45,000 and an increase in short-term unemployment of 10,000 (Riley and Young, 2000. ...

The New Deal for Young People: First Year analysis of the Implications for the Macroeconomy
  • Citing Article