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Interest and Prices: Foundations of a Theory of Monetary Policy Hardcover – September 7, 2003

ISBN-13: 978-0691010496 ISBN-10: 0691010498

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Interest and Prices: Foundations of a Theory of Monetary Policy + Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework + Monetary Theory and Policy
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Product Details

  • Hardcover: 808 pages
  • Publisher: Princeton University Press (September 7, 2003)
  • Language: English
  • ISBN-10: 0691010498
  • ISBN-13: 978-0691010496
  • Product Dimensions: 9.5 x 6.4 x 1.9 inches
  • Shipping Weight: 2.8 pounds (View shipping rates and policies)
  • Average Customer Review: 3.2 out of 5 stars  See all reviews (6 customer reviews)
  • Amazon Best Sellers Rank: #520,876 in Books (See Top 100 in Books)

Editorial Reviews


Winner of the 2003 Award for Best Professional/Scholarly Book in Economics, Association of American Publishers

From the Inside Flap

"This long-awaited book by master macroeconomist Michael Woodford belongs on the bookshelf of every economist. Woodford is well-known as one of the world's current most original thinkers in economics. In this book you will find not only a unified treatment of the theoretical foundations of monetary policy, optimal policy inertia, indicator variables for optimal policy, monetary policy in a world without money, fiscal requirements for price stability, optimal rules for setting interest rates, and much more, but also practical details of implementation such as methods used by various central banks for controlling interest rates."--William A. Brock, University of Wisconsin, Madison

"Michael Woodford's Interest and Prices is a major contribution to economics. The book it most resembles is Patinkin's classic Money, Interest, and Prices now nearly 40 years old--and it may well have the same impact. Woodford's book illustrates the immense progress that macroeconomics has made in the past generation, from its careful treatment of dynamics and of optimizing behavior, to its discussion of optimal monetary policy. It is an impressive intellectual achievement, all the way from abstract theory to Taylor rules for central banks. I have gone to it, pen and paper in hand, many times over the past few years when it was still a manuscript. Each time, I found it illuminating. This book is a classic."--Olivier Blanchard, Massachusetts Institute of Technology

"The ideas contained in Michael Woodford's book Interest and Prices have influenced the way central bank economists-to say nothing of academic economists-in every corner of the world think about the conduct of monetary policy. These ideas form the most significant original book-length contribution to monetary economics since Don Patinkin's Money, Interest, and Prices. Woodford's insights into a cashless world will prove enduring."--Fumio Hayashi, University of Tokyo, author of Econometrics

"This is the most important book in monetary theory in at least two decades, illustrating all the major conceptual ideas in modern monetary economics, and then some. Woodford's book is especially commendable for its forward-looking elements, such as how to conduct monetary policy in a near cashless society, and how international currencies may coexist when global financial markets become truly integrated. Some of the individual chapters are already firmly established as standard technical references for modern methods in monetary policy economics. By showing how to stretch the limits of purely analytical methods, the book also builds a bridge from classical monetary theory to modern computational macroeconomics, possibly pointing the way to a new generation of medium-scale macroeconomic models."--Kenneth Rogoff, Economic Counselor and Director of Research, International Monetary Fund

"This book is a masterpiece. Michael Woodford provides a lucid dynamic synthesis of two schools of thought--Monetarism versus New Keynesianism--that have recently been the subject of a remarkable convergence of thinking among macroeconomists."--Assaf Razin, Tel Aviv University, author of Fiscal Policies and Growth in the World Economy

"This is a landmark work that reevaluates monetary theory and policy in an intertemporal optimization framework with sticky prices. Well written, it systematically revisits classic issues in monetary theory and allows rigorous welfare analyses."--Maurice Obstfeld, University of California, Berkeley, coauthor of Foundations of International Macroeconomics

"A new landmark treatise on monetary theory. A must read for econo-nerds."--N. Gregory Mankiw, Chairman of the Council of Economic Advisors, citing his "favorite purchase of 2003" in The New York Times

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Customer Reviews

3.2 out of 5 stars
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Most Helpful Customer Reviews

25 of 26 people found the following review helpful By Rodrigo D. S. Bueno on April 21, 2004
Format: Hardcover
For sure this will become a masterpiece in modern monetary policy. It is very well detailed, and discusses what is really important in the field.
It is already a reference book, and must be read by practitioners, students and academicians interested in the subject.
However the book has the following caveats:
- It is too verbose. That means that you might have the same deepness with less words. As a consequence the reader often gets tired, bored and misses the main point;
- It does not talk about conventional monetary policy as you could find in Walsh's "Monetary Theory and Policy";
- Trying to make the exposition easier, the models are presented in separeted too far apart pieces. This makes it difficult to fully grasp the details at once.
In view of this, I must say that Walsh's book might become a necessary complements to Woodford's. Notice that the styles and goals of both books are different. Therefore, buying one or another depends on your intentions.
In additon I'd say that Woodford's overall strategy is right in terms of the sequence of subjects treated. However, shorter and more numerous chapters might improve the exposition tactics.
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11 of 13 people found the following review helpful By "dryfai" on January 14, 2004
Format: Hardcover
This book is written by one of the giants in modern macroeconomics. Although a little bit lengthy, the book contains nearly all the recent advance in monetary economics, especially in the interest rate rules and optimal monetary policy. Of course, you should be familiar with log linearization and simple matrix algebra in order to access the mathematics of the book. Woodford¡¦s Interest and prices and Walsh¡¦s Monetary Theory and Policy (2nd edition) would definitely become the required text for every graduate course in monetary economics around the world.
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9 of 13 people found the following review helpful By Gaurav Saroliya on March 1, 2005
Format: Hardcover
It's a most compehensive and thought-provoking treatise on modern monetary economics, an excellent follow-up to Carl Walsh's Monetary Theory and Policy. I think this reviewer who gives the book 2 stars just on account of one technical error that he claims to have discovered is being extremely myopic. The book is not about solutions to stochastic difference equations and neither does the author claim to be an expert at stochastic difference equations. The book handles what it is meant to handle admirably well, i.e. MONETARY ECONOMICS
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