Hostname: page-component-84b7d79bbc-c654p Total loading time: 0 Render date: 2024-07-29T06:54:53.778Z Has data issue: false hasContentIssue false
  • English
  • Français

The UK Monetarist Experiment

Published online by Cambridge University Press:  28 November 2008

P. Arestis
P. Arestis
Affiliation:
Economics DivisionThames Polytechnic
Get access Rights & Permissions [Opens in a new window]

Abstract

The paper argues that the monetarist ‘experiment’ of the first Thatcher government in Britain (1979–83) has been unsuccessful. Alternative monetarist philosophies and their specific application to Britain are outlined. These propositions are then re-examined in the light of the actual experience of economic policy in Britain, and are found to be inadequate. Inflation in Britain has come down, but ironically after a period when money supply grew quickly – well above the government's target ranges. Unemployment has also risen much more severely than monetarists predicted. ‘Monetarism’ in Britain can be interpreted less in terms of theoretical and empirical economic analysis as in terms of value judgements about the size of the public sector and about paying a high cost in unemployment to stabilise prices.

Type
Articles
Information
Journal of Public Policy , Volume 4 , Issue 1 , February 1984 , pp. 39 - 56
Copyright
Copyright © Cambridge University Press 1984

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Andersen, L. and Jordan, J. L. (1968) Monetary and fiscal actions: A test of their relative importance in economic stabilisation, Federal Reserve Bank of St. Louis, Monthly Review (November).CrossRefGoogle Scholar
Arestis, P. (1982) Is there any crowding out of private expenditure by fiscal actions?, Thames Papers in Political Economy (Spring).Google Scholar
Arestis, P. and Hadjimatheou, G. (1980) Macroeconomic policies of the 1974–79 Labour Government, Thames Papers in Political Economy (Autumn).Google Scholar
Arestis, P. and Hadjimatheou, G. (1981) Money, prices and causality, British Review of Economic Issues (November).Google Scholar
Arestis, P. and Driver, C. (1983) UK Unemployment and Post-Keynesian Remedies, (Unpublished).CrossRefGoogle Scholar
Artis, M. and Bladen-Hovell, R. (1983) Monetarist Macroeconomics in Practice: The First Thatcher Government, 1979–83, Paper delivered at the S.E.R. Conference (September).Google Scholar
Blinder, A. S. and Solow, R. M. (1973) Does fiscal policy matter?, Journal of Public Economies (11).CrossRefGoogle Scholar
Brunner, K. and Meltzer, A. H. (1976a) An aggregative theory for a closed economy. In Stein, J. L. (ed.), Monetarism, Amsterdam: North-Holland.Google Scholar
Brunner, K. and Meltzer, A. H. (1976b) Reply: Monetarism: The principal issues, areas of agreement and the work remaining. In Stein, J. L. (ed.) Monetarism, Amsterdam: North-Holland.Google Scholar
Buiter, W. H. and Miller, M. (1981) The Thatcher experiment: The first two years, Brookings Papers on Economic Activity (No. 2).CrossRefGoogle Scholar
Burton, J. (1982) The varieties of monetarism and their policy implications, The Three Banks Review (June).Google Scholar
Currie, D. A. (1976) Some criticisms of the monetary analysis of balance of payments correction, Economic Journal (September).CrossRefGoogle Scholar
Desai, M. (1981) Testing Monetarism. London: Frances Pinter.Google Scholar
Fforde, J. S. (1983) Setting monetary objectives, Bank of England Quarterly Bulletin (June).Google Scholar
Frenkel, J. (1981) The collapse of purchasing power parities during the 1970s, European Economic Review (May).CrossRefGoogle Scholar
Friedman, M. (1960) A Programme for Monetary Stability, New York: Fordham University Press.Google Scholar
Friedman, M. (1968) The role of monetary policy, American Economic Review (May).Google Scholar
Friedman, M. (1972) Comments on the critics, Journal of Political Economy (09/10).CrossRefGoogle Scholar
M., Friedman (1980) Memorandum to House of Commons Select Committee on the Treasury and Civil Service: Monetary Policy, HC720 London: HMSO.Google Scholar
Friedman, M. and Friedman, R. (1980) Free to Choose, London: Penguin.Google Scholar
Friedman, M. and Meiselman, D. (1963) The relative stability of monetary velocity and the investment multiplier in the United States, 1896–1958. In Commission on Money and Credit: Stablisation Policies, Research Study No. 2, Englewood Cliffs, NJ: Prentice-Hall.Google Scholar
Godley, W. A. H. (1979) Britain's chronic recession - Can anything be done?. In Beckerman, W. (ed.), Slow Growth in Britain: Causes and Consequences, Oxford: Clarendon Press.Google Scholar
Goodhart, C. A. E., (1981) Problems of monetary management: The UK experience. In Courakis, A. S. (ed.), Inflation, Depression and Economic Policy in the West, London: Mansell.Google Scholar
Hahn, F. (1981) Preposterous claims of monetarists, The Times (28 April).Google Scholar
Hendry, D. (1980) Econometrics – Alchemy or science? An inaugural lecture, Economica (November).CrossRefGoogle Scholar
HMSO (1981) Third Report from the Treasury and Civil Service Committee: Session 1980–81. London: HMSO.Google Scholar
Johnson, H. G. and Frenkel, J. (1975) The Monetary Theory of the Balance of Payments. London: Allen and Unwin.Google Scholar
Kaldor, N. (1982) The Scourge of Monetarism, Oxford: Oxford University Press.Google Scholar
Keran, M. W. (1969) Monetary and fiscal influences on economic activity – The historical evidence, Federal Reserve Bank of St. Louis, Monthly Review (February).CrossRefGoogle Scholar
Keran, M. W. (1970) Monetary and fiscal influences on economic activity: The foreign experience, Federal Reserve Bank of St. Louis, Monthly Review (February).CrossRefGoogle Scholar
Keynes, J. M. (1925) The Economic Consequences of Mr. Churchill, reprinted in the Collected Writings of John Maynard Keynes, Vol. IX, London and Basingstoke: Macmillan, pp. 207–30.Google Scholar
Laidler, D. (1976) An elementary monetarist model of simultaneous fluctuations in prices and output. In Frisch, H. (ed.), Inflation in Small Countries: Lecture Notes in Economics and Mathematical Systems, Berlin-Heidelberg-New York: Springer-Verlag.Google Scholar
Laidler, D. E. W. (1980) Memorandum of evidence on monetary policy, Third Report from the Treasury and Civil Service Committee on Monetary Policy, 1980–81. London: HMSO.Google Scholar
Laidler, D. E. W. (1981) Monetarism: an interpretation and an assessment, Economic Journal (March).CrossRefGoogle Scholar
Lucas, R. E. Jr (1976) Econometric policy evaluation: A critique. In Brunner, K. and Meltzer, A. H. (eds.), The Phillips Curve and Labour Markets, Carnegie-Rochester Conference Series, No. 1, Amsterdam: North-Holland.Google Scholar
Mayer, T. (1978) The Structure of Monetarism. New York & London: W. W. Norton.Google Scholar
Minford, A. P. L. (1980a) A rational expectations model of the U.K. under fixed and floating exchange rates. In Brunner, K. and Meltzer, A. H. (eds.), The State of Macroeconomics, Carnegie-Rochester Conference Series No. 11, Amsterdam: North-Holland.Google Scholar
Minford, A. P. L. (1980b) Memorandum to House of Commons Select Committee on the Treasury and Civil Service: Monetary Policy, HC720. London: HMSO.Google Scholar
Moore, B. J. (1979) The endogenous money supply, Journal of Post Keynesian Economics (Autumn).CrossRefGoogle Scholar
Mussa, M. (1974) A monetary approach to balance of payments analysis, Journal of Money, Credit and Banking (August).CrossRefGoogle Scholar
Muth, J. F. (1961) Rational expectations and the theory of price movements, Econometrica (July).CrossRefGoogle Scholar
Santomero, A. M. and Seater, J. J. (1978) The inflation-unemployment trade-off: A critique of the literature, Journal of Economic Literature (06).Google Scholar
Sargent, T. J. (1976) A classical macroeconometric model for the United States, Journal of Political Economy (04).CrossRefGoogle Scholar
Sargent, T. J. and Wallace, N. (1976) Rational expectations and the theory of economic policy, Journal of Monetary Economics (04).CrossRefGoogle Scholar
Stein, J. L. (1976) Inside the monetarist black box. In Stein, J. L. (ed.), Monetarism, Amsterdam: North-Holland.Google Scholar
St. John-Stevas, N., MP (1982) Tory philosophy – A personal view, The Three Banks Review (June).Google Scholar
Tobin, J. and Buiter, W. (1976) Long-run effects of fiscal and monetary policy on aggregate demand. In Stein, J. L. (ed.), Monetarism, Amsterdam: North-Holland.Google Scholar
Ward, T. (1982) Mrs. Thatcher's Economic Strategy in Practice, Journal of Post Keynesian Economics, (Summer).CrossRefGoogle Scholar
Wickens, M. R. (1981) The new macroeconomics, Discussion Papers in Economics and Econometrics, No. 8114, University of Southampton (Inaugural Lecture delivered 5 February 1981).Google Scholar
Wood, A. (1975) A Theory of Profits, Cambridge: Cambridge University Press.Google Scholar