Monetary Economics

Monetary Economics

by B. Kettell

Paperback(Softcover reprint of the original 1st ed. 1985)

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Product Details

ISBN-13: 9780860105626
Publisher: Springer Netherlands
Publication date: 08/31/1985
Series: Banking and Finance Series , #1
Edition description: Softcover reprint of the original 1st ed. 1985
Pages: 372
Product dimensions: 7.01(w) x 10.00(h) x 0.03(d)

Table of Contents

1 The Concept of Money.- Money — evolution and functions.- From paper money to bank deposits.- The cheque clearing system.- The characteristics of money.- Liquidity.- The quantity theory of money — the basis of monetarism.- How money affects the economy — the transmission mechanism.- The measurement of the money supply.- Domestic credit expansion.- A key issue in monetary theory.- Appendix 1.- Measuring changes in the value of money-price index numbers.- Monetary statistics.- 2 The United Kingdom Financial System.- The functions of a financial system.- The monetary sector.- Recognised banks.- The Bank of England.- Policy and markets.- Corporate services.- Finance and industry.- Banking supervision.- Operations.- The functions of the Bank of England.- The banking role.- The note issue.- The gilt-edged market.- Balance sheet management of the clearing banks.- The balance sheet items of the clearing banks: definitions.- Other financial institutions (OFIs).- Building societies.- Life insurance and pension funds.- Unit trusts and investment trusts.- The 1979 UK Banking Act — The background to the legislation.- The Banking Act 1979 — The legislation.- The supervision and monitoring proposals — the post-banking Act position.- Appendix 1.- Summary Capital Accounts and Financial Surplus or Deficit: Analysis by Sector.- 3 Money Markets.- What is a money market?.- The London money market.- The discount market.- Functions of the discount houses.- The parallel markets.- The inter-bank market.- The local authority market.- The inter-company market.- Finance house market.- The Eurocurrency markets.- Money markets and the financial press.- Appendix 1.- Assets held by the discount market 1962–1984.- 4 The Money Supply.- The bank credit multiplier.- Can the banks manufacture money indefinitely?.- The major influences on UK money supply changes.- The public sector.- The private sector.- The external sector.- The major controls influencing recent monetary growth.- Monetary control implications.- Recent developments.- Can the authorities control the money supply?.- Appendix 1.- External and foreign currency counterparts relationship with the balance of payments.- Appendix 2.- Links between balance of payments financing, External Finance of the PSBR and Sterling M3 in 1982.- 5 Interest Rates.- Function of interest rates.- Determination of interest rates, demand and supply of funds.- The supply of funds.- The demand for funds.- Interest rate determination.- International factors affecting interest rates.- The term structure of interest rates.- Default risk.- The role of inflation.- Indexation — is it desirable?.- The determination of retail bank’s base rate.- Appendix 1.- Price and yield — a key relationship.- 6 Aspects of Monetary Theory.- Monetarists and the quantity theory of money.- An extension of the quantity equation: the Cambridge k.- Measuring velocity.- The classical dichotomy and the neutrality of money.- The modern quantity theory: monetarism.- Cost push versus demand pull.- Keynes, money and inflation.- Macro-economic policy — is it necessary?.- The new classicists and the rational expectations school.- The Phillips curve and inflation.- The monetarists versus the Keynesian debate: its implications for monetary targets.- Experience with monetary targets.- Fiscal policy.- The role of the exchange rate.- Monetarist and Keynesian views: some further considerations.- The monetarist claim revisited.- The Keynesian claim revisited.- Classicists, monetarists and Keynesians: who is right?.- 7 Controlling Money Supply.- Criteria of efficiency in monetary control.- The goals of monetary policy.- The targets of monetary policy.- Exchange rate targets and monetary targets: the need for choice.- Intermediate indicators of monetary policy.- Instruments of monetary policy: market forces versus portfolio constraints.- Advantages of relying on market forces for monetary control.- Disadvantages of relying on market forces for monetary control.- Advantages of relying on portfolio constraints for monetary control.- Disadvantages of relying on portfolio constraints for monetary control.- Market operations: the techniques.- Portfolio constraints: the techniques.- The Public Sector Borrowing Requirement (PSBR).- Lags.- The efficiency of monetary control.- The medium-term financial strategy.- 8 International Trade and the Balance of Payments.- Why do countries trade?.- How has world trade evolved?.- What is the balance of payments and why is it important?.- The structure of the balance of payments.- The current account.- The capital account.- Official financing.- The changing nature of UK trade and payments.- North sea oil: its contribution to the UK balance ofpayments and to GNP.- The adjustment problem.- (1) Automatie adjustment.- (2) Discretionary adjustment.- Are import controls desirable?.- The arguments against.- The arguments in favour.- Appendix 1.- The invisibles account.- Appendix 2.- The capital account.- Appendix 3.- Official financing.- 9 The Foreign Exchange Market.- Exchange rate regimes.- The breakdown of the Bretton Woods system.- The impact of OPEC on the international economy.- Floating exchange rates and the new role of the IMF.- The European monetary system — the intervention systems.- Has the EMS been a success?.- Should Britain join the EMS.- The arguments in favour of EMS membership.- The arguments against membership.- Fixed versus flexible exchange rates.- The arguments for fixed exchange rates.- Arguments in favour of floating exchange rates.- Overshooting — an argument for fixed exchange rates.- Forecasting exchange rates.- The medium/long term.- Short-term influences on exchange rates.- Forecasting exchange rates by using one single variable.- 10 International Liquidity.- The International Monetary Fund.- Foreign exchange.- Central Bank gold holdings.- Special drawing rights.- How have international reserves grown over time?.- What characteristics should areserve asset possess.- Gold versus SDRs.- The “privatisation” of the creation of new international liquidity.- Lending from the first oil shock to 1981.- 11 The Euro-Currency Markets.- What are Eurocurrencies?.- Why do Eurocurrency markets exist?.- Structure of Eurocurrency interest rates.- The relationship between Eurocurrency interest rates and domestic interest rates.- The effects of controls on capital flows.- The relationship between Euromarkets and the foreign exchange market — the forward exchange market.- The Eurodollar credit multiplier.- Should the Eurocurrency markets be controlled?.- Appendix 1.- Interest arbitrage and the determination ofthe forward exchange rate.- Appendix 2.- The eurodollar credit multiplier revisited.- Further Reading.

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