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...

This paper is one of four in this Working Paper Series, focusing on financial liberalisation, along with those of Kupiec, Miller and Weller, and Driscoll. It examines the extent to which international financial markets have become more integrated over the past decade. The finding that financial...

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