Modeling Monetary Economies [Paperback]

Bruce Champ (Author), Scott Freeman (Author)

Book Description

ISBN-10: 0521789745 | ISBN-13: 978-0521789745 | Publication Date: January 15, 2001 | Edition: 2

The approach of this text for upper-level undergraduates is to teach monetary economics using the classical paradigm of rational agents in a market setting. By teaching from first principles, the authors aim to instruct students not only in the monetary policies and institutions that exist today in the United States but also in what policies and institutions may or should exist tomorrow and elsewhere. The text builds on a simple, clear monetary model and applies this framework consistently to a wide variety of monetary questions. The authors have added in this second edition new material on speculative attacks on currencies, social security, currency boards, central banking alternatives, the payments system, and the Lucas model of price surprises. Discussions of many topics have been extended, presentations of data greatly expanded, and new exercises added.

Editorial Reviews

Review

"This is simply the best book on monetary theory with which I am familiar. I cannot emphasize strongly enough how this book belongs in the curriculum of advanced undergraduates. There is no acceptable alternative. Former students have told me that the best favor that they did for themselves, before going to graduate school in economics, was reading the earlier version of Champ and Freeman, cover to cover. In a better world, this would be the standard undergraduate macro text; and with the improvements in the new version, particularly the inclusion of the seminal Lucas model of price surprises, it may yet become so. The ideal course is based on Champ and Freeman, and on Russell W. Cooper, Coordination Games: Complementaries and Macroeconomics, Cambridge University Press, 1999. If you cannot do this for your intermediate students, do it for your advanced students." John Bryant, Rice University, and CentER, Tilburg University

"This is without a doubt the best text on the market in advanced undergraduate or masters-level monetary economics. Champ and Freeman provide a unified theoretical treatment of all the important topics in money and banking, and their second edition adds important topics in material on central banking, and the payments system." Stephen D. Williamson, University of Iowa

"This is an absolutely outstanding textbook. The authors are able to communicate at a very basic but rigorous level many of the complex and subtle issues being tackled by monetary theorists at the frontier of the discipline. The text is easy to read and the theoretical analysis is applied to many real-world issues and phenomena, which make it a big hit with my students." David Andolfatto, Simon Fraser University

"Champ and Freeman's book is excellent in the way that it teaches students to use dynamic models to think carefully about important monetary, fiscal, and macroeconomic issues. The authors put the models to work to explain a variety of classic and contemporary problems in macroeconomics. The models are rigorous and carefully explained, yet they are simple enough that undergraduates can quickly learn to put them to work. I used the first edition of this book to teach undergraduates. This edition is even better than the first." Thomas Sargent, Stanford University

"In this book, Champ and Freeman do an admirable job of making modern monetary economics accessible to students. I've used it as the main text, with good results, both at the undergraduate and master's level. The well-chosen data illustrations added in the second edition can only enhance its student appeal." Finn Kydland, Carnegie Mellon University

Book Description

Uniquely among monetary textbooks, this text teaches monetary economics using a simple model based on standard microeconomics. The model is clearly and explicitly specified so that students see and participate in discovering the implications of the model for monetary questions. Variations of this model are then used to address the important monetary topics-- inflation, currency crises, monetary unions, bank runs, the payments system, central banking, and the national debt, among many others.

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Product Details

• Paperback: 344 pages
• Publisher: Cambridge University Press; 2 edition (January 15, 2001)
• Language: English
• ISBN-10: 0521789745
• ISBN-13: 978-0521789745
• Product Dimensions: 10 x 7 x 0.7 inches
• Shipping Weight: 1.7 pounds
• Average Customer Review: 4.8 out of 5 stars  See all reviews (4 customer reviews)
• Amazon Best Sellers Rank: #423,982 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

7 of 7 people found the following review helpful:

5.0 out of 5 stars Beautiful; economics as it should be written, January 20, 2004

By 

H. David Peirce "Zossima" (Houston, TX USA) - See all my reviews
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This review is from: Modeling Monetary Economies (Paperback)

Economists have a responsiblity to communicate as simply as possible. Too often complex mathematics are an egotistic tool of the economist that merely frustrates the reader. Champ and Freeman's Modeling Monetary Economies is a wonderful volume that explains tough issues in monetary economics by building upon Wallace and Bryant's overlapping generations (OLG) model.

The OLG framework is a very simple framework that has its limitations, yet it is a powerful explanatory device. Champ and Freeman apply it to the following exercises:
* Introduce money into an economy--any grad student of economics (as I once was) will tell you this is no simple task! We take money for granted, of course, but mathematical models tend to imply that money is unnecessary! Just getting money into an economic model without unreasonable assumptions is itself an accomplishment.

* Inflation--again, not easy to do in other mathematical models of money--and anticipated inflation

* International currency exchange and the indeterminancy of the exchange rate

* Central banking and changes to the money supply

* Banks and lending

* Deficits and the national debt

* The interaction of all of the above

The book also has exercises in it that apply and extend the models introduced in each chapter.

RECOMMENDATION
I recommend this book for advanced year undergrads (in mathematical econ programs) and graduate students. It really is a great book that builds a conceptual knowledge of the interaction of the various components of monetary economics. This is useful for understanding more complicated dynamic optimization models. And it provides models that are useful in their own right and relevant as the basis for further (ie., dissertation) research.

3 of 5 people found the following review helpful:

4.0 out of 5 stars Academic, organized, and extremely concise, April 27, 2000

By 

Kevin Niu - See all my reviews

This review is from: Modeling Monetary Economies (Hardcover)

This book is a very good introduction to quantative monetary theories. Readers with science or engineering background can especially benefit from authors' concise mathematical expressions. It gives a clear and academic view about fundamental theories, so don't expect to see a lot of economical data or "stories".

1 of 2 people found the following review helpful:

5.0 out of 5 stars A thoughtful introduction to mathematical economics, November 7, 2001

By 

Nostha Chartikavanij "Amateur pianist" (Bangkok Thailand) - See all my reviews
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This review is from: Modeling Monetary Economies (Hardcover)

This book is an example of how mathematics is intelligently used in economics, and the understanding of the latter is thereby enhanced. Only basic algebra is used, yet the authors are able to make non-trivial explanation about economic phenomena, from why money must exist to inflation to payment system. The text is mathematical and abstract, but as I read it, my frame of mind remains firmly that of an economist, and not of a mathematician (which is as it should be). The text is carefully written, flowing and anticipative of difficulties that a reader may have.

This is not an introductory text to economics, and I reject the idea that those with strong mathematical background should be introduced to economics in a different way from others. Any beginner, mathematical or not, should read Samuelson and the like first.