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Real Exchange Rates (EXCH) is the next variable that will be analysed in this VAR. The reason for including exchange rates in the VAR is that they are an important channel through which the price of oil may impact upon economic activity.Another reason is that the UK exports crude oil worldwide therefore it may be possible to analyse the effects on domestic exchange rates should there be a change in the price of oil. The real exchange rate data uses Jan 2005 = 100 as the base.
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An advantage of observing statistics from this range is that it encapsulates both positive and negative performances of the economy helping to produce a much more accurate insight
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As previously stated, the aim of the paper is to observe and analyse the effects of oil price shocks on key macroeconomic indicators in the UK economy. From this the aim is to conc
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