The monetary problems of a dependent economy: the Australian experience 1948-1952

Abstract

The present article considers special monetary problems that are likely to confront dependent economies because of the dominant influence exerted upon them by the behaviour of the balance of payments. The author examines the concrete case of Australia, a country which, he says, offers a particularly good example of an economy which is both economically dependent and highly developed financially. The main purpose of the paper is to assess the extent to which the Commonwealth Bank was successful in promoting “stabilisation” policies from 1948 to 1952. To this aim, the author provides a detailed analysis of the policy followed by the Central Bank and of its effects on the liquidity position of commercial banks. The investigation is also extended, however, to individual sectors of the economy and to various aspects of the money and capital markets, so as to place in proper perspective the effective possibilities and limits of monetary policy in a country such as Australia. 

JEL: E52, E58, E65, F32