Monetary Economics

Monetary Economics: Theories, Evidence and Policy, Second Edition provides basic introduction to various aspects of monetary economics. The first chapter tackles the functions, advantages, and definitions of money. Chapter 2 deals with the monetary transmission mechanism. Chapter 3 discusses the demand for money, while Chapter 4 talks about the financial intermediaries and the supply of money. The book also covers the classical system and the neutrality of money. The Keynesian system and monetarism are then tackled. The text reviews the empirical evidence relating to the role of money. Other related topics covered are inflation; the balance of payments and the foreign exchange rate; and monetary policy. The book also deals with the techniques of monetary control. The last chapter discusses the U.K. post-WW2 monetary policy. The book will be of great interest to students and professionals involved in the study of monetary economics.

1 The Functions, Advantages and Definitions of Money

The Functions of Money

The Advantages of Having Money: the Monetary Economy

What is Money? Some Theoretical and Empirical Definitions

United Kingdom Definitions of Monetary Aggregates

2 Monetary Transmission Mechanisms and the Channels of Monetary Influence

The Portfolio Balance Transmission Mechanism

The Wealth Transmission Mechanism

The Credit Availability Transmission Mechanism

The Expectations Transmission Mechanism

The Open Economy

Summary and Conclusion

3 The Demand for Money

The Classical Approach

The Keynesian Analysis

Post-Keynesian Developments

The Monetarist Approach

The Empirical Evidence

4 Financial Intermediaries and the Supply of Money

The Nature and Functions of Financial Intermediaries

The Supply of Money

Non-Bank Financial Intermediaries

Notes

5 The Classical System and the Neutrality of Money

The Classical System

The Neutrality Conditions

Note

6 The Keynesian System

Keynesian Economics

The Keynesian Model in the Open Economy

The Re-Interpretation of Keynes

Notes

7 Monetarism

The Quantity Theory

The Transmission Mechanism

The Inherent Stability of the Private Sector and the Unimportance of Sectoral Detail

The Role of Macroeconomic Policy

Monetarists, Fiscal Policy and Crowding-out

Note

8 A Review of the Empirical Evidence Relating to the Role of Money and the Effectiveness of Monetary Policy

Time Lags

Keynes versus the Quantity Theory in Predicting Macrovariables

Monetary Policy versus Fiscal Policy

A Question of Causality

9 Inflation

Market Theories of Inflation

Non-Market Theories of Inflation

Inflation in an International Context

Note

10 The Balance of Payments and the Foreign Exchange Rate

Monetary and Other Approaches to the Balance of Payments

Foreign Exchange Rate Determination

11 Monetary Policy: Targets, Indicators, Rules and Discretion

The Choice of Targets and Indicators

Rules versus Discretion

12 Techniques of Monetary Control

Direct Controls over Deposits

Direct Controls over Supply-Side Counterparts

Market Controls over Deposits

Market Controls over Supply-Side Counterparts

Controlling the PSBR

Note

13 Monetary Policy in the UK since the Second World War

1945-59

The 1960s

Competition and Credit Control

December 1973-9

The Early 1980s

Appendix

References

Index