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Comment:The Statistical Relationship between the Money Supply and the Public Sector Borrowing Requirement
Author(s) -
BEENSTOCK MICHAEL,
LONGBOTTOM ANDREW
Publication year - 1980
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/j.1468-0319.1980.tb00591.x
Subject(s) - economics , money supply , inflation (cosmology) , control (management) , government (linguistics) , monetary economics , argument (complex analysis) , medium term , monetary policy , money creation , macroeconomics , keynesian economics , central bank , linguistics , philosophy , physics , biochemistry , chemistry , management , theoretical physics
The Controversy A controversy has recently broken out as to whether the PSBR influences the money supply in the UK. Clearly if this relationship does not exist much of the basis of the government's macroeconomic strategy falls away since the government is acting on the assumption that by controlling the PSBR it will be able to control money supply growth and hence inflation in the medium term. This argument has been forcibly stated in the recent Green Paper on Monetary Control (Cmnd 7858) and is enshrined in the Medium‐term Financial Strategy that was announced in the March Budget.