Over the 1990s, this sector has been heavily influenced by comprehensive deregulation of the U.K. financial services industry, which has caused stable long-run relationships for the U.K. consumption function to shift significantly. We show that specifications incorporating such features capture recent U.K. behavior reasonably well and pick up the main shifts in the savings ratio. We also show that changes in the extent of financial regulation cause the transmission of monetary policy to alter in important ways that have implications for the way in which monetary policy should be implemented. This paper investigates the way differences in the ability to borrow against future income affect the human capital accumulation process. By employing a general equilibrium model, it is shown that, as the fraction of a country's population constrained from borrowing increases, individuals invest less time in education, and thus the country-wide human capital declines.
Empirical evidence offers support to the developed hypothesis.
It is also shown that in countries characterized by high levels of government spending on education, borrowing constraints tend to be less pervasive for human capital accumulation than ones in which public spending on education is relatively low. This paper examines the behavior of adjustment credit at the Federal Reserve discount window over the period 1990 to 1997. It finds that, in spite of the decline in the traditional borrowing function, the relationship still contains information that is important for the execution of monetary policy. In particular, the paper shows the usefulness of distinguishing between the spread between the targeted Federal Funds rate and the discount rate and the spread between the actual Federal Funds rate and the targeted rate. The paper also demonstrates the potential importance of using high frequency data.