Publisher's Synopsis
How far is it beneficial to try and control the supply of money while the financial system is changing and evolving so rapidly? With the development of financial innovation and the rapid re-regulation of the financial institutions in the UK, the effects on monetary policy are far reaching. Looking at the context of both banks and building societies, this book characterizes financial innovations in order to illustrate the way they behave in the monetary system and show that they have played an important part in the inability of economists to forecast the economy in the 1980s and 1990s.;Covering such topics as credit liberalization, market-led interest rates, consumers' expenditure function, definitions of money, internationalization and demand for money, this study offers a full, up-to-date account of monetary policy. This examination of the changes in the behaviour of financial institutions draws out important theoretical implications for monetary theory and policy. Using empirical data and econometric models to test his conclusions, Michael Pawley shows that financial innovation has, in many ways, made monetarism redundant.
