Implementing monetarism: some reflections on the U.K. experience

Abstract

Contemporary British macro-economic policy is conceived and rationalised as an exercise in “monetarist gradualism”. The present paper is concerned with the problem of its implementation: that is the extent to which the chosen intermediate target available is a “controllable variable” in the sense required by a “monetarist” monetary policy. Specifically, the author looks at how effective monetary control has been in the U.K, and what would be involved in attempting to formulate a set of monetary arrangements more conducive to an “acceptable” degree of control of £M3.

JEL: E52, E65