Monetary Theory and Policy

by Carl E. Walsh

A new edition of the leading text in monetary economics, a comprehensive treatment revised and enhanced with new material reflecting recent advances in the field. This text presents a comprehensive treatment of the most important topics in monetary economics, focusing on the primary models monetary economists have employed to address topics in theory and policy. It covers the basic theoretical approaches, shows how to do simulation work with the models, and discusses the full range of frictions that economists have studied to understand the impacts of monetary policy. Among the topics presented are money-in-the-utility function, cash-in-advance, and search models of money; informational, portfolio, and nominal rigidities; credit frictions; the open economy; and issues of monetary policy, including discretion and commitment, policy analysis in new Keynesian models, and monetary operating procedures. The use of models based on dynamic optimization and nominal rigidities in consistent general equilibrium frameworks, relatively new when introduced to students in the first edition of this popular text, has since become the method of choice of monetary policy analysis. This third edition reflects the latest advances in the field, incorporating new or expanded material on such topics as monetary search equilibria, sticky information, adaptive learning, state-contingent pricing models, and channel systems for implementing monetary policy. Much of the material on policy analysis has been reorganized to reflect the dominance of the new Keynesian approach. Monetary Theory and Policy continues to be the only comprehensive and up-to-date treatment of monetary economics, not only the leading text in the field but also the standard reference for academics and central bank researchers.

Genres: Economics, Textbooks, Business

613 pages, Hardcover

First published October 27, 1998

Reviews

[Frank Ashe]

Trying to understand how money works in the economy, I thought this book might help; it had good reviews.
It's useless.
How can you have models of the financial part of the economy without having commercial banks as a major part of the model?
The index has 3 references to banks, all for the introductory chapter.

BTW the maths in the models didn't bother me - I have a PhD in the subject. It was the structure of the models that threw me! No wonder many economists had trouble understanding the GFC.

[Zhiteng]

A high recommended textbook for PhD students who are interested in macro/ monetary economics. It covered a broad range of topics on monetary economics, and gave crystal clear derivations of all theoretical models, and nice descriptions of intuitions behind them. More reader- friendly than Mike Woodford and more detailed than Jordi Gali’s textbooks on very similar topics!