Financial Innovations and the Interest Elasticity of Money Demand in the United Kingdom, 1963¡V2009
This paper empirically examines the relationship between financial innovations and interest elasticity of money demand in the UK. Contrary to most research work in this area, the results indicate that financial innovations and other deregulatory changes in financial market conditions after the 1980s have raised the interest elasticity of money demand, and this appears to support the Gurley-Shaw hypothesis. The evidence calls into question the relative efficacy of a monetary targeting approach in the conduct of monetary policy.
Volume (Year): 8 (2009)
Issue (Month): 3 (December)
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