Abstract
The key institutional peculiarity of Britain that caused the economics of Keynes is that bank reserves on all types of deposits were traditionally the same. This meant that decisions of savers and speculators to increase holdings of Savings-deposits (which are the alternative to securities) did not increase bank lending ability. The key mechanism of flexible interest rates was disabled, and arbitrage between different types of investments caused the fixing of the bank rate and the deposit rate to be transmitted to all short-term rates, and with inelastic expectations, to long rates.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
