Essay title: the uk productivity puzzle

1) First, find the data on capacity utilisation.                               (10 marks)

i)  This data can be obtained from the Bank of England, http://www.bankofengland.co.uk. Go to Publications, then choose “Agents’ Summary of Business Conditions”.

ii) Download the Bank of England Agents’ Scores (the Excel spreadsheet).

iii) Create a chart showing the Agents’ scores for capacity constraints (both manufacturing and services) using Excel (for example). Show time on the horizontal axis, and the scores on the vertical axis. Include the chart(s) in your essay.

iv) Explain how these Agents’ scores are created and what they represent. Briefly comment your charts. Can you identify any underlying trend? (max 200 words)

2) Secondly, explain the UK productivity puzzle.   (80 marks – max 1,500 words)

i)  Why economists talk about a “UK productivity puzzle”? What is the evidence relatively to other countries?

ii) Explain which factors might be the cause of the UK productivity puzzle.

To complete the second task you must base your analysis upon the following two papers:

Barnett, A, Batten, S, Chiu, A, Franklin, J and Sebastiá-Barriel, M (2014), “The UK productivity puzzle”, Bank of  England Quarterly Bulletin, Vol. 54, No. 2, pages 114–128.

Available online at:

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q201.pdf

Hughes, A and Saleheen, J (2012), “UK labour productivity since the onset of the crisis — an international and historical perspective”, Bank of England Quarterly Bulletin, Vol. 52, No. 2, pages 138–46.

Available online at:

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb120204.pdf

3) Finally, explain why productivity is important for monetary policy decisions. In the light of the productivity puzzle, how should UK monetary policy be set?                                                             (10 marks – max 300 words)

Additional instructions:

• The word limit does not include charts/figures and bibliography.

The hand in date for the essay is 12 pm Monday 17 November 2014.

Must be Harvard Refrencing