Monetary Economics, 2nd Edition

This textbook seeks to break new ground in developing an integrated and comprehensive overview of advanced monetary economics. It integrates the presentation of monetary theory with its heritage, empirical formulations and empirical tests. Part 1. Introduction and Heritage, 1. Introduction, 2. The heritage of monetary economics, Part 2. Money in the Economy, 3. Money in the economy: general equilibrium analysis, Part 3. The demand for money, 4. The transactions demand for money, 5. Portfolio selection and the speculative demand for money, 6. Precautionary and buffer stock demand for money, 7. Monetary aggregation, 8. The demand function for money, 9. The demand function for money: estimation problems, techniques and findings, Part 4. Monetary Policy and Central Banking, 10. The operating targets of monetary policy: money supply and interest rates, 11. The central bank: goals, targets and instruments, 12. The central bank: independence, time consistency and credibility, Part 5. Monetary Policy and the Macroeconomy, 13. The determination of aggregate demand, 14. The classical paradigm in Macroeconomics, 15. The Keynesian paradigm, 16. Money, bonds and credit in macro modeling, 17. Macro models and perspectives on the neutrality of money, 18. Walras' law and the interaction among markets, Part 6. The Rates of Interest in the Economy, 19. The macroeconomic theory of the rate of interest, 20. The structure of interest rates, Part 7. Overlapping generations models of money, 21. The benchmark overlapping generations model of fiat money, 22. The OLG model: seigniorage, bonds and the neutrality of money, 23. The OLG model of money: making it more realistic, Part 8. Money and Financial Institutions in Growth Theory, 24. Monetary Growth Theory Book Cover......Page 1 Title......Page 4 Copyright......Page 5 Contents......Page 8 Preface......Page 26 Acknowledgments......Page 29 Part I: Introduction and heritage......Page 30 1 Introduction......Page 32 2 The heritage of monetary economics......Page 63 Part II: Money in the economy......Page 106 3 Money in the economy: General equilibrium analysis......Page 108 Part III: The demand for money......Page 148 4 The transactions demand for money......Page 150 5 Portfolio selection and the speculative demand for money......Page 167 6 Precautionary and buffer stock demand for money......Page 204 7 Monetary aggregation......Page 234 8 The demand function for money......Page 266 9 The demand function for money: Estimation problems, techniques and findings......Page 299 Part IV: Monetary policy and central banking......Page 332 10 Money supply, interest rates and the operating targets of monetary policy: Money supply and interest rates......Page 334 11 The central bank: Goals, targets and instruments......Page 367 12 The central bank: Independence, time consistency and credibility......Page 393 Part V: Monetary policy and the macroeconomy......Page 436 13 The determination of aggregate demand......Page 438 14 The classical paradigm in macroeconomics......Page 480 15 The Keynesian paradigm......Page 539 16 Money, bonds and credit in macro modeling......Page 592 17 Macro models and perspectives on the neutrality of money......Page 628 18 Walras’s law and the interaction among markets......Page 665 Part VI: The rates of interest in the economy......Page 688 19 The macroeconomic theory of the rate of interest......Page 690 20 The structure of interest rates......Page 719 Part VII: Overlapping generations models of money......Page 744 21 The benchmark overlapping generations model of fiat money......Page 746 22 The OLG model: Seigniorage, bonds and the neutrality of fiat money......Page 775 23 The OLG model of money: Making it more realistic......Page 802 Part VIII: Money and financial institutions in growth theory......Page 830 24 Monetary growth theory......Page 832 Index......Page 864 Economics, Finance, Business & Industry Book Cover 1 Title 4 Copyright 5 Contents 8 Preface 26 Acknowledgments 29 Part I: Introduction and heritage 30 1 Introduction 32 2 The heritage of monetary economics 63 Part II: Money in the economy 106 3 Money in the economy: General equilibrium analysis 108 Part III: The demand for money 148 4 The transactions demand for money 150 5 Portfolio selection and the speculative demand for money 167 6 Precautionary and buffer stock demand for money 204 7 Monetary aggregation 234 8 The demand function for money 266 9 The demand function for money: Estimation problems, techniques and findings 299 Part IV: Monetary policy and central banking 332 10 Money supply, interest rates and the operating targets of monetary policy: Money supply and interest rates 334 11 The central bank: Goals, targets and instruments 367 12 The central bank: Independence, time consistency and credibility 393 Part V: Monetary policy and the macroeconomy 436 13 The determination of aggregate demand 438 14 The classical paradigm in macroeconomics 480 15 The Keynesian paradigm 539 16 Money, bonds and credit in macro modeling 592 17 Macro models and perspectives on the neutrality of money 628 18 Walras’s law and the interaction among markets 665 Part VI: The rates of interest in the economy 688 19 The macroeconomic theory of the rate of interest 690 20 The structure of interest rates 719 Part VII: Overlapping generations models of money 744 21 The benchmark overlapping generations model of fiat money 746 22 The OLG model: Seigniorage, bonds and the neutrality of fiat money 775 23 The OLG model of money: Making it more realistic 802 Part VIII: Money and financial institutions in growth theory 830 24 Monetary growth theory 832 Index 864

This successful text, now in its second edition, offers the most comprehensive overview of monetary economics and monetary policy currently available. It covers the microeconomic, macroeconomic and monetary policy components of the field.

Major features of the new edition include:

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• Stylised facts on money demand and supply, and the relationships between monetary policy, inflation, output and unemployment in the economy.
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• Theories on money demand and supply, including precautionary and buffer stock models, and monetary aggregation.
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• Cross-country comparison of central banking and monetary policy in the US, UK and Canada, as well as consideration of the special features of developing countries.
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• Monetary growth theory and the distinct roles of money and financial institutions in economic growth in promoting endogenous growth.
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This book will be of interest to teachers and students of monetary economics, money and banking, macroeconomics and monetary policy.

A comprehensive overview of advanced monetary economics, integrating the presentation of monetary theory with empirical formulations and their empirical tests. Unlike most texts this book brings together in a single unified source the core areas of monetary economics. Key features include:• cross-country comparison of central banking in the US, UK and developing countries• theories and empirical studies on money demand, including precautionary and buffer stock models and monetary aggregation• detailed comparison of Keynesian and modern classical macroeconomic theoretical and policy models• a focus on the role of money and financial institutions and growth.