Title

An Empirical Investigation of the Effects of Monetary Changes on the U.K. Economy

Document Type

Article

Department or Administrative Unit

Economics

Publication Date

11-1988

Abstract

Theoretical discussions involving the relationship between the money supply and an economy's output has dominated the field of monetary economics for many years. Theoretically, the resolution of two separate issues is crucial - (1) the question of causality in the money-income relationship and (2) the effects of monetary changes on the two components of nominal output; i. e., the price level and real output. Two major opposing views can readily be identified: the monetarist view and the keynesian view. The monetarists' view is based on the postulates of the Quantity Theory of Money. In their view, the money supply is exogenously determined. Furthermore, according to the monetarists, there exists a direct causal flow from money to nominal output. 3 Consequently, changes in the money supply dominate movements in nominal output. Some monetarists allow for a feedback from nominal output to the money supply, but even then, monetary changes are considered the major factors determining nominal output.

Comments

The download link on this page leads to a pre-peer reviewed version of the article, which has been published in final form here. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.

This article was originally published in Scottish Journal of Political Economy.

Due to copyright restrictions, this article is not available for free download from ScholarWorks @ CWU.

Journal

Scottish Journal of Political Economy

Rights

© 1988 Scottish Economic Society

Share

COinS