Download ECON 613-001 Advanced Monetary Theory

Econ 613 - Adv. Monetary Theory
Professor Mott
Office Hours: TuTh 2:30-4:00 PM
Office : Econ. 102
SPRING 1986
SYLLABUS
This is a course in advanced monetary theory . It is designed to serve as
part of a sequence with Econ. 612, though it can be taken independently. The
purpose of the sequence as I see it is to acquaint participants with various
issues and contributions within the domain of monetary theory, i.e., the theory
of what money has to do with an economic system. To that end I have arranged a
series of topics for this course which have been chosen with the goal of allowing us to examine the logical and historical development of certain ideas which
have come to represent the major widely-held notions of what the relation of
money to an economy is. We will not be able to cover thoroughly all the topics
which are listed on this syllabus. Thus you should take the reading list as a
.list of material with which you may want to familiarize yourself at some point
i~ your life (like before the comprehensive exam) and as a list containing some
material with which you will want to familiarize yourself intimately during this
semester.
The assignments to be completed in order to receive a grade in the course
are three. Each counts for 1/3 of your grade. The first two as s ignments are two
take home exams. The first will occur upon completing Topic IV, and the second
upon completirig Topic VIII.
The third requirement is a 10-20 page paper on a topic of your own
choosing, which, however, must be approved by me--and some of you may be quite
surprised by what I won't approve . This paper is due on the day for which the
final exam i s scheduled.
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The list of topics and suggested readings for the course follows:
Four books were ordered to be available for purchase in the bookstore:
Laurence Harris, Monetary Theory
John Maynard Keynes, The General Theory of Employment, Interest and
Money ( GT)
Robert Gordon {ed.), Milton Friedman's Monetary F.ramework.
Robert Lucas, Studies in Business-Cycle Theory.
Copies of all the other selections will be available grouped by topic at Kinko's Copy
Center across the street.
I. The Essence and Existence of Money
Harris, Chaps. 1-2
Robert Clower (ed.), Monetary Theory: Selected Readings, Intro and Selection 3
Ross Starr, "The Structure of Exchange in Barter and Monetary Economics QJE
88 (1972)
Paul Samuelson, "An Exact Consumption-Loan Model of Interest with or without
the Social Contrivance of Money," JPE 66 (1958)
Hyman Minsky, Frank Hahn's Money anaTnflation: A Review Article," JPKE 6 {1984)
II. Neoclassical Monetary Theory
Harris, Chaps. 3-6
Clower (ed.), Selections 9-12
Clower, "What Traditional Monetary Theory Really Wasn 1 t, 11 Can. JE (1969)
· Samuelson, Nonoptimality of Money Holding under Laissez Faire," Can. JE {1969)
Harry G. Johnson, Further Essays in Monetary Economics, Chaps 4, 5
Irving Fisher, The Purchasing Power of Money, Chaps . 2, 4, 5, 8,
Knut Wicksell, Lectures on Political Economy, Vol. II, pp. 141-208
Friedrich Lutz, "On Neutral Money," in Striessler (ed.) , Roads to Freedom
Eugene Fama, "Banking in the Theory of Finance," JME 6 (1980) .
Robert Greenfield and le land Yeager, A Lai ssez-Fafre Approach to Monetary
Stability, JMCB 15 (1983).
Lawrence White:-"compet it i ve Payments Systems and the Unit of Account, AER 74
(1984).
I I I . Keynes
Keynes, A Tract on Monetary Reform, pp.61-70
, A Treatise on Money, Vol. I, Book III
- - - , GT, Preface, Chaps. 1-2, 13-22
IV. Neoclassical Keynesianism
Harris, Chaps. 9-12, 15-17
John Hicks, "Mr . Keynes and the 'Classics'; A Suggested Interpretation,
Econometrica 5 (1937)
James lobin, A General Equilibrium Approach to Monetary Theory," JMCB 1 {1969)
al Banks as Creators of 'Money
in Essays in - -- Commerci
Economics
(and elsewhere)
John Gurley and Edward Shaw, "Financial Intermediaries and the SavingInvestment Process , J. of Finance 11 (1956)
V. Monetari.sm
Harris, Chap. 7
Gordon, {ed.), pp. 1-62, 77-89, 111-172.
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-3VI. "New" Keynesianism
Harris, Chaps. 13, 14
Don Patinkin, Money, Interest, and Prices, Chap. 13
Clower (ed.), Selections 14, 19
Axel Leijonhufvud, Information and Coordination, Selections l, 6, 7
Robert Barro and Herschel Grossman, "A General Disequilibrium Model of
Income and Employment," AER 61 (1971)
Kenneth Arrow, "Toward a Theory of Price Adjustment" in Moses Abramovitz
et al., The Allocation of Economic Resources
TracyMott, "Mr. Keynes and the Neoclassics, 11 Social Concept 1 (1984)
VII. "Post" Keynesianism
Keynes, GT, Chap. 12
Robinson-,-Economic Heresies, Chaps . 5, 6
, "The Rate of Interest, in The Rate of Interest and Other Essays
-N-i-ch_o_l_a_s Kaldor, "Speculation and Economic Stability," RES 7 (1939)
Michal Kalecki, "The Principle of Increasing Risk," Economica 4 (1937) .
, "Political Aspects of Full Employment," in Selected Essays on the
-.,,.----,Oy n am i cs of the Capitalist Economy
Mott, "Kalecki 's Principle of Increasing Risk and the Relation Among
Mark-up Pricing, Investment Fluctuations, and Liquidity Preference," Econ.
Forum (1985) "Towards a Post-Keynesian Formulation of Liquidity Preference,"
JPKE 8 (1985).
Tobin, "Real Balance Effects Reconsidered," in Asset Accumulation and
· Economic Activity. Clower (ed.), Selection 13.
Paul Davidson, "Money and the Real World," EJ (1972)
Minsky, "Fi nanci a 1 Innovation s and Fi nanci a1Instabil ity: Observations and
Theory"
Basil Moore, "Monetary Factors," in Alfred Ekhner (ed.), A Guide to
Post-Keynesian Economics.
John Caskey and Steve Fazzari, "Disinflation, Wage Flexibility, and Nominal
Debt Commitments."
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VI I I. The "New Classical Macroeconom ic s "
Harri s, Chap. 21
Friedman, "The Ro l e of Monetary Policy," in Th e Optimum Quantity of Money.
Edmund Phelps, "Money Hage Dynam ics and Labor Market Equilibrium,"
JPE 76 (1968)
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Lucas, pp. 66-89, 179-296.
Thomas Sargent and Neil Hallace, _"Rational Expectations and the Theory of
Economic Policy," JME 2 (1976)
Rodney Maddock and Michael Carter, "A Child's Guide to Rational Expectations," JEL 20 (1982)
Stanley Fischer, "Long-Term Cont ract s, Rational Expectations, and the
Optimal Money Supp ly Rule," JPE 85 (1977)
Randa 11 Bauso r, "The Rat i ona l-txpectat ions Hypothesis and the Epi stemi cs
of Time," Cam. JE 7 (1983)
IX. Money, Growth, and Economic Development
Ronald McKinnon, Money and Capital in Economic Development, Chps. 5, 6, 7.
Kalecki, Essays on Developing Economies, Chp. 5.
Harris, Chap. 18.