Topics in Money and Finance

This course investigates a range of classic questions in monetary economics, mainly from the perspective of modern finance but embracing a range of methodological approaches (historical and institutional, theoretical and empirical).

The course will be run as a lecture-seminar hybrid, with a typical week involving a lecture on Monday and student presentations on Wednesday, both of which will involve also classroom discussion. Presentations and discussion will be worth 30% and 20% of the final grade respectively. The remaining half of the course grade will come from a 10-15 page final paper on an approved topic.

Prerequisites: Intermediate Microeconomics, and Intermediate Macroeconomics. It will be helpful, but not essential, if students also have some background in either money or finance, either practical experience (such as an internship) or coursework (such as Economics of Money and Banking, or Economics of Finance).

Limited Enrollment: To facilitate discussion, enrollment will be limited to 25.

Course Outline

• Origins of the Fed
• Young, Allyn A. (1924) Ch. 31-34 in “Commerce: The Marketplace of the World”.
• Mehrling, Perry. (2002) “Economists and the Fed: Beginnings”, Journal of Economic Perspectives (Fall)
• Timberlake, R.H. (1984) “The Central Banking role of clearinghouse associations”, Journal of Money, Credit, and Banking 16(1)
• Meltzer, Allan H. (2003) A History of the Federal Reserve, Vol. 1: 1913-1951.
• Mints, Lloyd. (1945) A History of Banking Theory in Great Britain and the United States.
• Hawtrey, Ralph. (1932) The Art of Central Banking.

• Lender of Last Resort
• O’Brien, Denis. (2003) “The Lender of Last Resort Concept in Britain”, History of Political Economy 35 (1)
• Bagehot, Walter. (1873) Lombard Street , A Description of the Money Market.
• Fischer, Stanley. (1999) "On the Need for an International Lender of Last Resort", Journal of Economic Perspectives 13 (4), 85-104.
• Eichengreen, B. (2002) Financial Crises and What to Do About Them. Oxford.

• Quantity Theory of Money
• Laidler, David. (1991) The Golden Age of the Quantity Theory.
• Fisher, Irving. (1911) The Purchasing Power of Money.
• Friedman, Milton. (1956) Studies in the Quantity Theory of Money.
• Brunner, Karl and Allan H. Meltzer. (1993) Money and the Economy, Issues in Monetary Analysis.
• Lucas, Robert and Nancy Stokey. (1987) “Money and Interest in a Cash-in-Advance Economy” Econometrica

• Inside and Outside Money
• Rist, Charles. (1940) History of Monetary and Credit Theory from John Law to the Present.
• Gurley, John G. and Edward S. Shaw. (1960) Money in a Theory of Finance.
• Friedman, Milton. (1969) “The Optimum Quantity of Money.”
• Mehrling, P. (1995) “Note on the Optimum Quantity of Money”, Journal of Mathematical Economics 24: 249-58.

• Government Finance and Money
• Mitchell, Wesley Clair. (1903) A History of the Greenbacks
• Keynes, John Maynard. (1940) How to Pay for the War
• Lerner, Abba. (1944) The Economics of Control
• Hansen, Alvin. (1943) “The public debt and our future prosperity” Finance 10 (July)
• Woodford, Michael. (1998) “Public Debt and the Price Level”, mimeo.

• Keynes and Keynesianism
• Laidler, David. (1999) Fabricating the Keynesian Revolution.
• Leijonhufvud, Axel. (1981) “The Wicksell Connection” Ch. 7 in Information and Coordination, Oxford.
• Mehrling, Perry. (1997) The Money Interest and the Public Interest. Ch. 7-8.
• Colander, David C. and Harry Landreth. (1996) The Coming of Keynes to America.

• Monetary Walrasianism
• Hicks, John. (1935) “Suggestion for Simplifying the Theory of Money”, Economica
• Marschak, Jacob. (1938) “Money and the Theory of Assets”, Econometrica
• Modigliani, Franco. (1944) “Liquidity Preference and the Theory of Interest and Money”, Econometrica
• Patinkin, Don. (1956) Money, Interest and Prices.
• Tobin, James. (1969) “A general equilibrium approach to monetary theory”, Journal of Money, Credit, and Banking 1(1)
• Hahn, Frank. (1965) “Some Problems of Proving the Existence of Equilibrium in a Monetary Economy.”

• Bretton Woods
• Mundell, Robert. (2000) “A Reconsideration of the Twentieth Century”, American Economic Review (June): 327-340.
• Neikirk, William R. (1987) Volcker, Portrait of the Money Man.
• Treaster, Joseph B. (2004) Paul Volcker, The Making of a Financial Legend.

• Finance
• Black, Fischer. (1971) “Banking and Interest Rates in a World Without Money”, Journal of Bank Research
• Fama, Eugene. (1983) “Financial Intermediation and Price Level Control” Journal of Monetary Economics
• Posen, Adam, ed. (2000) “The Future of Monetary Policy” International Finance 3(2)
• Hayek, Friedrich. (1990) Denationalisation of Money: The Argument Refined.

• Towards a Market Theory of Money
• Hicks, John. (1989) A Market Theory of Money, Oxford.
• Treynor, Jack L. (1987) “The Economics of the Dealer Function”, Financial Analysts Journal (Nov)
• Grossman, Sanford and Merton Miller. (1988) “Liquidity and Market Structure.” Journal of Finance 43(3)
• O’Hara, Maureen. (1995) Market Microstructure Theory
• LeBaron, Blake. (2004) “Agent-based Financial Markets: Matching Stylized Facts with Style.”

• Neo-Wicksellianism
• Taylor, John. (1999) Monetary Policy Rules, Chicago.
• Woodford, Michael. (2004) Interest and Prices, Foundations of the Theory of Monetary Policy, Princeton.
• Wicksell, Knut. (1898) Interest and Prices

• Whither Monetary Economics?
• Stiglitz and Greenwald. (2003) Towards a New Paradigm in Monetary Economics. Cambridge University Press.
• Wallace, Neil. (2001) “Whither Monetary Economics?” International Economic Review 42 (November)