ABSTRACT
We intend to use the theoretical model of portfolio behaviour developed in Chapter 2 to investigate the portfolio behaviour of UK private sector pension funds (PSPFs) during the period of UK exchange controls. There are two main reasons for this choice. First, private sector funds had the fewest restrictions on their choice of investments during the period. Public sector funds, at least during the early years of the period, were largely restricted to investing in public sector debt. The portfolio decisions of public sector funds during this period are therefore largely uninteresting. So, to avoid the distortions caused by aggregating public and private sector funds, we concentrate attention on PSPF portfolio behaviour. Second, by restricting the sample period to that coinciding with the period when exchange controls operated, we avoid the problem of dealing with the major structural change in investment opportunities initiated by the abolition of these controls.
