The Interplay between Money Market Development and Changes in Monetary Policy Operations in Small European Countries, 1980-2000

Forssbaeck, Jens and Lars Oxelheim (2007) The interplay between money market development and changes in monetary policy operations in small European countries 1980-2000. In David Mayes and Jan Toporowski (eds) (2007): Open Market Operations and Financial Markets. London, Routledge.

The Research Institute of Industrial Economics Working Paper Series No. 669

54 Pages Posted: 31 Aug 2007 Last revised: 29 Jul 2015

See all articles by Jens Forssbæck

Jens Forssbæck

Lund University - Department of Economics

Lars Oxelheim

Research Institute of Industrial Economics (IFN); University of Agder; Knut Wicksell Center for Financial Studies, Lund University

Date Written: September 22, 2006

Abstract

We study the interplay between money market development and changes in monetary policy operating procedures in 11 European countries from c. 1980 up to the launch of the EMU. Aspects of money market development such as size and structure of different market segments, and institutional and regulatory changes, are addressed. We recount and empirically examine the reorientation of monetary policy instruments away from quantitative direct control instruments towards indirect market-based instruments.The process of deregulation is uniform across countries. The path of money market development varies substantially, whereas changes in central bank instruments show both similarities and differences. We hypothesize a relationship between the two processes and provide tentative evidence.

Keywords: Monetary policy operations, Money market, European Union, Deregulation

JEL Classification: E52, E58, G28, N24

Suggested Citation

Forssbaeck, Jens and Oxelheim, Lars, The Interplay between Money Market Development and Changes in Monetary Policy Operations in Small European Countries, 1980-2000 (September 22, 2006). Forssbaeck, Jens and Lars Oxelheim (2007) The interplay between money market development and changes in monetary policy operations in small European countries 1980-2000. In David Mayes and Jan Toporowski (eds) (2007): Open Market Operations and Financial Markets. London, Routledge., The Research Institute of Industrial Economics Working Paper Series No. 669, Available at SSRN: https://ssrn.com/abstract=1010903 or http://dx.doi.org/10.2139/ssrn.1010903

Jens Forssbaeck

Lund University - Department of Economics ( email )

P.O. Box 7082
S-220 07 Lund
Sweden

Lars Oxelheim (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
SE-10215 Stockholm
Sweden
+46 8 665 4527 (Phone)
+46 8 665 4599 (Fax)

University of Agder ( email )

Serviceboks 422
N-4604 Kristiansand, VEST AGDER 4604
Norway

Knut Wicksell Center for Financial Studies, Lund University ( email )

P.O.Box 7080
S-220 07 Lund
Sweden
+46462228744 (Phone)

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