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The Evolution of British Monetarism: 1968-1979

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  • Aled Davies

    ()
    (Mansfield College, University of Oxford)

Abstract

How far were monetary targets imposed on the post-1974 Labour Government by international and domestic financial markets enthused with the doctrines of ‘monetarism’? The following paper attempts to answer this question by demonstrating the complex and contingent nature of the ascent of British ‘monetarism’ after 1968. It describes the post-devaluation valorisation of the ‘money supply’ which led investors to realign their expectations with the behaviour of the monetary aggregates. The collapse of the global fixed-exchange rate regime, coupled with vast domestic inflationary pressures after 1973, determined that investors came to employ the ‘money supply’ as a convenient new measure with which to assess the ‘soundness’ of British economic management. The critical juncture of the 1976 Sterling crisis forced the Labour Government into a reluctant adoption of monetary targets as part of a desperate attempt to regain market confidence. The result was to impose significant constraints on the Government’s economic policymaking freedom, as attempts were made to retain favourable money supply figures exposed to the short-term volatility of increasingly-globalised and highly-capitalized financial markets.

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Bibliographic Info

Paper provided by Economics Group, Nuffield College, University of Oxford in its series Oxford University Economic and Social History Series with number _104.

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Length: 39 pages
Date of creation: 02 Oct 2012
Date of revision:
Handle: RePEc:nuf:esohwp:_104

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Web page: http://www.nuff.ox.ac.uk/economics/

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  1. Avner Offer, 2012. "The Economy of Obligation: Incomplete Contracts and the Cost of the Welfare State," Economics Series Working Papers Number 103, University of Oxford, Department of Economics.
  2. Emanuele Felice, 2011. "The determinants of Italy’s regional imbalances over the long run: exploring the contributions of human and social capital," Oxford University Economic and Social History Series _088, Economics Group, Nuffield College, University of Oxford.
  3. Eric B. Schneider, 2011. "Evaluating the Effectiveness of Yield-Raising Strategies in Medieval England: An Econometric Approach," Economics Series Working Papers Number 90, University of Oxford, Department of Economics.
  4. Alan de Bromhead & Barry Eichengreen & Kevin H. O'Rourke, 2012. "Right-Wing Political Extremism in the Great Depression," NBER Working Papers 17871, National Bureau of Economic Research, Inc.
  5. Douglas A. Irwin & Kevin H. O'Rourke, 2011. "Coping with Shocks and Shifts: The Multilateral Trading System in Historical Perspective," Oxford University Economic and Social History Series _092, Economics Group, Nuffield College, University of Oxford.
  6. Avner Offer, 2012. "Self-interest, Sympathy and the Invisible Hand: From Adam Smith to Market Liberalism," Economics Series Working Papers Number 101, University of Oxford, Department of Economics.
  7. Rui P. Esteves, 2011. "The Political Economy of Global Financial Liberalisation in Historical Perspective," Oxford University Economic and Social History Series _089, Economics Group, Nuffield College, University of Oxford.
  8. Schneider, Eric B., 2013. "Real wages and the family: Adjusting real wages to changing demography in pre-modern England," Explorations in Economic History, Elsevier, vol. 50(1), pages 99-115.
  9. Simon C. Holmes & Florian Ploeckl, 2012. "Bank on Steel? Joint-stocks and the Rationalisation of the British Interwar Steel Industry," Oxford University Economic and Social History Series _093, Economics Group, Nuffield College, University of Oxford.
  10. Eric Schneider, 2012. "Prices and Production: Agricultural Supply Response in Fourteenth-Century England," Economics Series Working Papers Number 97, University of Oxford, Department of Economics.
  11. Jane Humphries, 2011. "The Lure of Aggregates and the Pitfalls of the Patriarchal Perspective: A Critique of the High Wage Economy Interpretation of the British Industrial Revolution," Oxford University Economic and Social History Series _091, Economics Group, Nuffield College, University of Oxford.
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Cited by:
  1. Aled Davies, 2012. "The Evolution of British Monetarism: 1968-1979," Economics Series Working Papers Number 104, University of Oxford, Department of Economics.
  2. Avner Offer, 2013. "Narrow banking, real estate, and financial stability in the UK, c.1870-2010," Oxford University Economic and Social History Series _116, Economics Group, Nuffield College, University of Oxford.

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