OECD Economics Department Working Papers
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
Monetary Policy in the Wake of Financial Liberalisation
The paper examines evidence concerning the impact of financial liberalisation and innovation on monetary policy. The indicator value of monetary aggregates and the role of liquidity constraints in the transmission mechanism affecting aggregate demand are examined. Countries where financial liberalisation has led to problems with the role of monetary aggregates in general also display evidence of a reduced role for liquidity constraints in aggregate demand behaviour. The ability of the authorities to influence market-determined interest rates, a key aspect of monetary transmission in markets where liquidity constraints are not binding, is also examined ...
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