Money, Banking, and the Economy

Money, Banking, and the Economy

A Monetarist View

1st Edition - January 1, 1982

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  • Author: Barry N. Siegel
  • eBook ISBN: 9781483277530

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Description

Money, Banking, and the Economy: A Monetarist View presents a systematic "monetarist" approach to money, banking, and the economy. The monetarist approach is a blend of the pre-Keynesian quantity theory, the tradition represented by D. H. Robertson, and the modern monetarist school, represented by Milton Friedman and his followers. A systematic development of a model of nominal income, based upon the Cambridge equation and the loanable funds theory of interest, is presented. This model is applied to the business cycle; inflation and stagflation; balance of payments and foreign exchange rates; and monetary and fiscal policy theories. Comprised of 20 chapters, this book begins with an introduction to the concept of money and its functions and how it contributes to economic instability. The discussion then turns to the new and old definitions of the things that serve as money, the structure and institutions of financial markets and financial instruments; banks, banking markets, and banking regulations; and the money supply process. Subsequent chapters explore the structure and functions of the Federal Reserve System; the problem of implementing monetary policy; the Clower-Leijonhufvud idea of Say's Principle; the quantity theory of money as described by the equation of exchange or the Cambridge equation; and the connection between money and business cycles. The book concludes by describing a monetarist-public choice perspective on the efficacy of monetary and fiscal policies. This monograph will be of value to undergraduate students and economists.

Table of Contents


  • 1 Problems of a Money Economy

    1.1 The Functions of Money and Economic Efficiency

    1.2 Money and Economic Instability

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    2 The United States Money Stock: Changing Definitions

    2.1 The U.S. Money Stock—Old and New Definitions

    2.2 Which Definition of Money Is Best?

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    3 Financial Markets and Financial Institutions

    3.1 Types of Financial Markets

    3.2 Some Detail on Financial Intermediaries

    3.3 Federal and Federally Sponsored Credit Agencies

    3.4 Financial Instruments

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    4 The Banking Business: Fundamentals

    4.1 Commercial Banks as Firms

    4.2 Time and Savings Deposits; Borrowing and Bank Capital

    4.3 Bank Assets

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    5 Bank Operations, Regulation, and Structure

    5.1 Running a Bank

    5.2 Bank Regulation

    5.3 The Structure of the U.S. Banking Industry

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    6 The Money Supply Process

    6.1 An M-1 Money Supply Model

    6.2 Shifts in the Money Multipliers

    6.3 Analysis of Monetary Changes, 1960-1978

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    7 Organization and Control of the Federal Reserve System

    7.1 Organization of the Federal Reserve System

    7.2 Independence of the Federal Reserve System

    7.3 The Fed's Dechning Membership

    7.4 The Monetary Control Act of 1980

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    8 The Federal Reserve System as a Central Bank

    8.1 The Fed's Balance Sheet

    8.2 Member Bank Reserve Equation

    8.3 The Monetary Base as a Policy Target

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    9 The Instruments of Monetary Policy

    9.1 Open Market Operations

    9.2 The Discount Mechanism

    9.3 Reserve Requirements as a Policy Instrument

    9.4 Selective Instruments of Monetary Policy

    9.5 Moral Suasion

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    10 The Strategy of Monetary Policy

    10.1 An Outhne of the Strategy Problem

    10.2 Past Monetary Policy Strategies

    10.3 Recent Strategies of Monetary Policy

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    11 Say's Principle and Monetary Equilibrium

    11.1 Demand, Supply, and the Concept of Market Equilibrium: A Review

    11.2 Say's Principle

    11.3 Monetary Equilibrium and Disequilibrium

    11.4 Income Equilibrium and Monetary Equilibrium

    11.5 Equilibrium Income and Full Employment

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    12 Money and the Theory of Money Income

    12.1 The Quantity Theory of Money

    12.2 The Demand for Money

    12.3 A Monetary Theory of Money Income

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    13 The Rate of Interest and the Theory of Income

    13.1 Say's Principle and the Bond Market

    13.2 The Theory of Interest

    13.3 A Monetary Theory of Income

    Summary

    Appendix: The Term Structure of Interest Rates

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    14 The Federal Budget and the Economy

    14.1 Methods of Financing Government Spending

    14.2 Effects of a Pure Fiscal Policy on Money Income

    14.3 Fiscal Policy Financed with Changes in the Money Supply

    14.4 Empirical Evidence on Fiscal Policy

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    15 Transmission Mechanism of Monetary Influences on Income

    15.1 How Monetary Shocks Affect Nominal Income

    15.2 The Effects of Monetary Shocks on Output and Prices

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    16 Money and Business Cycles: The U.S. Experience

    16.1 Monetary and Nonmonetary Theories of the Business Cycle

    16.2 Behavior of Money Supply Over the Business Cycle

    16.3 Cyclical Changes in the Cambridge k (or the Income Velocity of Money)

    16.4 A "Neoclassical" Supply-Side Monetary Model

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    17 Inflation: Cause and Effects

    17.1 The Problem and Its Causes

    17.2 Some Myths of Inflation

    17.3 Effects of Inflation on Households and Business

    17.4 Inflationary Redistributions of Wealth and Income

    17.5 Effects of Inflation on Resource Allocation

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    18 Inflation and Unemployment: The Stagflation Problem

    18.1 The Natural Unemployment Rate Hypothesis

    18.2 Expectations-Augmented Phillips Curves and the Accelerationist Hypothesis

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    19 Money, the Balance of Payments, and Exchange Rates

    19.1 Money and the Balance of Payments Under Fixed Exchange Rates

    19.2 Flexible Exchange Rates and the Purchasing Power Parity Theory

    19.3 World Inflation

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    20 New Views on Stabilization Policies

    20.1 Brief Review of Empirical Evidence on Policy Activism

    20.2 The Credibility Effect, the German Hyperinflation, and the Fed

    20.3 Incomes Policies

    20.4 Can Democracy Tame Inflation?

    Summary

    Discussion Questions

    Important Terms and Concepts

    Additional Readings

    Glossary

    Index

Product details

  • No. of pages: 558
  • Language: English
  • Copyright: © Academic Press 1982
  • Published: January 1, 1982
  • Imprint: Academic Press
  • eBook ISBN: 9781483277530

About the Author

Barry N. Siegel

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