Financial deregulation is undermining the traditional role for what academic economists have defined as “money”. The textbook IS/LM models, that rely so heavily on a monetary transmission mechanism running from “money” to activity and prices, may no longer be the most appropriate...

The paper addresses the question of whether financial liberalisation and innovation have significantly altered consumption behaviour by reducing liquidity constraints as capital markets have become more flexible. A consumption model in which the permanent income hypothesis and extreme Keynesian...

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The key question addressed by the literature on money and growth is whether or not changes in the rate of monetary expansion have real effects on the growth path of the economy. This question is usually phrased in terms of the superneutrality of money. Superneutrality is distinguished from the...

Inflation targeting has been criticised for being ‘inflation only’ targeting and hence, for ignoring output and employment. This paper argues that this criticism is misplaced. The inflation-targeting framework has sufficient flexibility to allow for the short-run trade-off between output and...

The assumption of forward-looking agents in theoretical macroeconomic models has become increasingly popular in recent years. Despite this, the implementation of forward-looking expectations in large econometric models has been slower to emerge. The purpose of this paper is to survey, in a...