 Monetarism in the 1980sGordon Pepper
Chapter 4 in Inside Thatcher’s Monetarist Revolution, 1998, pp 37-44 from Palgrave Macmillan Abstract: Abstract A crisis in monetarism occurred early in the 1980s. The authorities had chosen to target broad money, more precisely sterling M3 (which included deposit accounts with banks as well as current accounts but excluded accounts denominated in foreign currency). In 1980–1 the target was missed by a large amount; sterling M3 grew by more than 18 per cent compared with the target of 7 per cent to 11 per cent.1 Worse still for the reputation of monetarism, the economy was in a recession that was obviously deepening and this suggested that monetary policy should be eased rather than tightened. In the event Geoffrey Howe ignored the behaviour of sterling M3 and reduced base rates. During the following year the target for sterling M3 was again overshot. Nigel Lawson subsequently introduced a target for M0 (the narrowest of the monetary aggregates) and switched between sterling M3 and M0. Later on, he abandoned monetary control and focused instead on sterling’s exchange rate. Keywords: Monetary Policy; Financial Market; Central Bank; Fiscal Policy; Money Supply (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-333-99547-1_4 Ordering information: This item can be ordered from DOI: 10.1007/978-0-333-99547-1_4 Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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