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THE IMPLICATIONS OF FISCAL POLICY FOR MONETARY POLICY AND THE BANKING SYSTEM.
THE IMPLICATIONS OF FISCAL POLICY FOR MONETARY POLICY AND THE BANKING SYSTEM.
- Source :
- American Economic Review; Mar42 Supplement, Vol. 32, p234, 16p
- Publication Year :
- 1942
-
Abstract
- The article focuses on the development of fiscal policy for monetary policy and the banking system. Fiscal policy could perhaps be regarded from the beginning as a substitute for central bank policy. The analysis of income-creating expenditures has been the chief preoccupation of fiscal theory. Since the first World War, revolutionary changes have occurred in American banking. The greatest change which has occurred in banking since the Reserve System was established has been in the growth of bank investments. This growth began in the first World War when the banks, with the aid of the new Reserve System, bought government securities for their own account and made loans to finance purchases by the public. As bank investments have increased, long-term interest rates have shown increased sensitivity to changes in bank reserves, and the emphasis in monetary theory has shifted to the need for controlling the long-term rates, as more effective for the control of investment, income, and employment than control merely of the short-term rates.
Details
- Language :
- English
- ISSN :
- 00028282
- Volume :
- 32
- Database :
- Complementary Index
- Journal :
- American Economic Review
- Publication Type :
- Academic Journal
- Accession number :
- 8703290