Monetary Theory and Policy [Hardcover]

Carl E. Walsh (Author)

Book Description

ISBN-10: 0262231999 | ISBN-13: 978-0262231992 | Publication Date: October 27, 1998

Monetary Theory and Policy presents an advanced treatment of critical topics in monetary economics and the models economists use to investigate the interactions between real and monetary factors. It provides extensive coverage of general equilibrium models of money, models of the short-run real effects of monetary policy, and game-theoretic approaches to monetary policy. Among the topics covered are money-in-the-utility-function models, cash-in-advance models, money and public finance, the credit channel of money, models of time inconsistency, monetary policy operating procedures, and interest rates and monetary policy.

The book has three innovative aspects. It uses dynamic simulations to evaluate quantitatively the significance of the channels through which monetary policy and inflation affect the economy. It extensively examines modern approaches to monetary policy that stress the incentives facing central banks and the strategic interactions between central banks and the private sector. Where most treatments of monetary policy emphasize money supply control and money demand, this book focuses on the implications of interest rate control for monetary policy.

The book is designed for use in first-year graduate courses in macro theory and second-year courses in monetary economics, for economic researchers in need of a systematic summary of recent developments in the field, for economists working in policy institutions, and for central bank staff economists.

Editorial Reviews

Review

"[This book] is absolutely superb."
—Kenneth Rogoff, Princeton University

About the Author

Carl E. Walsh is Professor of Economics at the University of California, Santa Cruz. He is coeditor of the International Journal of Central Banking and Visiting Scholar at the Federal Reserve Bank of San Francisco.

Product Details

• Hardcover: 504 pages
• Publisher: The MIT Press (October 27, 1998)
• Language: English
• ISBN-10: 0262231999
• ISBN-13: 978-0262231992
• Product Dimensions: 9.1 x 7 x 1 inches
• Shipping Weight: 2.2 pounds
• Average Customer Review: 4.3 out of 5 stars  See all reviews (9 customer reviews)
• Amazon Best Sellers Rank: #1,639,430 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

28 of 30 people found the following review helpful:

5.0 out of 5 stars The best text on advanced macroeconomics there is., December 7, 1999

By A Customer

This review is from: Monetary Theory and Policy (Hardcover)

This is the best book length treatment of the state of the art in academic thinking about inflation and central banking, a lot of what economics is about to lay people and politicians. While this is a graduate text in macroeconomics, in no way is it unnecessarily abtruse. You'll need to be comfortable with little more than algebra, linear difference equations, and the sort of elementary statistics practical economists do. Amazingly, this book has no obvious competitors because first rate economists wrongly disdain writing books.

34 of 38 people found the following review helpful:

1.0 out of 5 stars A not so enchanted point of view, August 19, 2007

By 

Ludovico Settembrini "Panta Rhei" - See all my reviews

This review is from: Monetary Theory and Policy, 2nd Edition (Hardcover)

If this book were a car, its selling would long have been forbidden! The "typos and corrections" offered by Carl E. Walsh's homepage have by now reached 10 pages. Chapter 6.5 "A Basic Open-Economy Model" has this way been completely revised by the maître. So, in case you are determined to read this book, start with a download of those typos and corrections! The publisher does not give the slightest hint of this problem within the book (Maybe, because the standard "errata-note" would have become an "errata-booklet"). This is really annoying, since you may lose a lot of time by trying to understand mathematical derivations, which are simply wrong. Weak consolation: the "typos and corrections" of Michael Woodford's supposed to be classic "Interest and Prices" sum up by now of 8 pages (Or should we say 38 pages, since "certain equations" of Woodford's chapter 5 are corrected in a separate paper? Unfortunately, I'm not kidding). However, Walsh's book does also suffer from contents-related problems: Throughout the book he derives all results based on the social planner solution of his models. He never even discusses the problem of this approach in the presence of the "wedge of inefficiency" that the usage of money can introduce in such models (Lucas, 1987, Models of Business Cycles). So after having yourself worked through Walsh's book and his typos and corrections, you cannot be sure that the conclusions and policy recommendations he draws will also hold for the market solution of his models.

13 of 13 people found the following review helpful:

5.0 out of 5 stars Great Book, June 14, 2004

By A Customer

This review is from: Monetary Theory and Policy, 2nd Edition (Hardcover)

This book deals with most of the modern monetary theory issues. Eventhough it clearly says it is written for graduate students, undergraduate ones with good algebra and calculus levels could accomplish the basic acknowledgement of the book. The second edition has been improved a lot as I see it. Bonds have been added to the agent's budget constraint. This is very helpful for the interpretation of the first order conditions. Chapter 4, mainly the first part was rewritten in a most comprehensible way. There are a few things to highlight about the dark sides: In chapter 3, Professor Walsh did not include bonds in the budget constraint which would have been really useful. Besides there are a few mistakes in the appendix regarding the expected values. Chapter 7, "Macroeconomic Implications" is not very clear which assumptions have been made to approximate around the steady state. Despite there are still a few little mistakes, the book is excellent, I guess the best in Monetary Theory and Policy. Totally recommendable!!!