Should the UK economy head up the M4?

Article Abstract:

Monetary growth in theUK is measured in terms of two monetary aggregates, M0 and M4. M0 is narrow in scope, covering only notes and coin in circulation. M4 is much broader in that it comprises all deposits with banks and building societies, as well as cash incirculation. As of Feb 1993, the outstanding level of M0 was just 20 billion pounds sterling while that of M4 was nearly 520 billion pounds. However, M0 hasbeen growing more rapidly than M4, thereby sending conflicting signals to policy makers. The strength of M0 requires policy tightening and higher interest rates while the weakness of M4 requires policy loosening. It is proposed that M0 is of minor relevance, partly because it cannot be controlled by the Treasury or by the Bank of England. M4 is a more significant measure since it can be influenced by the authorities while, at the same time, can influence the economy's future path.

Money supply

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The economy: in better shape than you think

Article Abstract:

The dramatic increase in labor productivity that was achieved in the 1980s bodes well for the economy's long-term capacity to supply goods and services. The hard-won productivity gains that were obtained as industrial relations improved across all sectors have, so far, not been affected by the current recession, and as such, should remain one of the principal motors of growth when the economic recovery in the UK begins.

Labor productivity

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