§ Mr. Austin Mitchellasked the Chancellor of the Exchequer whether he will publish in the Official Report a table showing the increase in the supply of broad money and narrow money in real terms since 1973 and 1979, respectively, compared with Germany, the United States of America and Japan.
§ Mr. Ian StewartThe information requested is contained in the following table. The table provides figures for the growth in the nominal money supply, prices (as measured by the GNP/GDP deflator), and figures for the real money supply derived from these. The data is given to 1984Q3, the latest quarter for which there is data for all of these countries. Interpretation of these figures ought to take into account any established trends in the velocity of circulation.
For the United Kingdom narrow and broad money are represented respectively by MO and £M3, the currently targeted aggregates. The series for other countries are taken from the IMF's "International Financial Statistics". The figures for narrow money for other countries are close to MO in coverage. They are not necessarily the target aggregates, so for the US MI is given as well. With regard to broad money differences in coverage between countries are likely to assume greater importance, and there is more scope for distortion (for example, in the United Kingdom as a result of financial liberalisation since 1979).
491W
Growth in the broad and narrow money supply since 1973 and 1979 (average percentage change per annum) United Kingdom Germany United States Japan Narrow Broad Narrow Broad Narrow M1 Broad Narrow Broad money money money money money money money money Nominal money supply 6½ 1973 to 1984 3rd quarter 9¼ 12½ 4¼ 6¾ 6¾ 10 6½ 10 1979 to 1984 3rd quarter 4½ 14¾ 2 4¼ 5¼ 7 8¾ 2½ 7¼ Real money supply 1973 to 1984 3rd quarter -3½ -½ 2½ 5 ½ ½ 3¾ 1½ 4¾ 1979 to 1984 3rd quarter -5 4½ 4 6¼ ¾ 2½ 4¼ 1 5¾ Inflation (as measured by GNP/GDP deflator) 1973 to 1983 3rd quarter 13¼ 4¼ 6 5 1979 to 1984 3rd quarter 9¾ 3¾ 4¼ 1½ Notes:
(i) Nominal monetary aggregates were deflated by the GNP deflator. While money stock data is end-of-period, for 1973 and 1979 calendar year values for the deflator were used.
(ii) For the United Kingdom "narrow" money is represented by MO and "broad" money by £M3. (Source: Financial Statistics).
(iii) Money supply data for countries other than the United Kingdom is from the IMF's International Financial Statistics. "Broad" money is taken to be the sum of money (line 34) plus quasi-money (line 35). "Narrow" money is taken to be Reserve Money (line 14), and therefore corresponds closely to MO. Note that IMF definitions of money supply differ somewhat from national definitions.
(iv) For the US only the table also shows figures for M1, in view of M1's role as an important target variable in US monetary policy.