ABSTRACT
The Radcliffe Committee saw the monetary system more as a set of institutions supporting numerous flows of funds, than as a set of institutions providing a stock of means of payment. Monetary policy was seen as acting on total demand mainly by affecting the ease of access to finance, or what was more vaguely called the 'liquidity of the economy'. This chapter reviews the change in ideas about monetary policy since the Radcliffe Committee reported, and discusses the shift of emphasis towards concern with the monetary aggregates. It considers more systematically the place of monetary policy in the management of the economy. The chapter also reviews some of the problems of implementing monetary policy of management of the growth of the aggregates; of the choice of aggregate for the control variable; and the case for what are sometimes known as 'rolling targets'.
