- Monetary theory
Monetary theory (known also as money/macro theory) is a major branch of
macroeconomicsand a framework of analysis that deals with monetary systems and their effect on equilibrium with production, employment and the level of prices within a macroeconomy. [Elgar, Edward., Rabin, Alan A. (2004), page 1] In its own definition, it deals with the difference between "broad money", typically non-circulating currency such as deposit certificates and treasury bills and "shallow money" that circulates amongst the population of an economy. Within monetary theory, the problems and benefits between these monies are compared using "spending" and "goods-against-goods" ( Say's Law) [Elgar, Edward., Rabin, Alan A. (2004), page 1 -- "Two approaches tackle the central questions of macroeconomics. One we call the spending approach. A second, the goods-against-goods (or Say’s Law) approach, goes further back to the fundamentals of production and the exchange of goods against goods."] approaches, each of which stipulate the socio-economic repercussions when one approach dominates the market over the other in varying degrees.
The current state of monetary theory
Since 1990, the classical form of monetarism has been questioned because of events which many economists have interpreted as being inexplicable in monetarist terms, namely the unhinging of the money supply growth from inflation in the 1990s and the failure of pure monetary policy to stimulate the economy in the 2001-2003 period.
Alan Greenspan, former chairman of the Federal Reserve, argued that the 1990s decoupling was explained by a virtuous cycleof productivity and investment on one hand, and a certain degree of " irrational exuberance" in the investment sector. Economist Robert Solowof MIT suggested that the 2001-2003 failure of the expected economic recovery should be attributed not to monetary policy failure but to the breakdown in productivity growth in crucial sectors of the economy, most particularly retail trade. He noted that five sectors produced all of the productivity gains of the 1990s, and that while the growth of retail and wholesale trade produced the smallest growth, they were by far the largest sectors of the economy experiencing net increase of productivity. "2% may be peanuts, but being the single largest sector of the economy, that's an awful lot of peanuts."
Neutrality of money
Real versus nominal in economics
Quantity theory of money
* Barnett, William A. (2008). "monetary aggregation," "
The New Palgrave Dictionary of Economics", 2nd Edition. [http://www.dictionaryofeconomics.com/article?id=pde2008_M000351&q=monetary%20economics&topicid=&result_number=3 Abstract.]
* Dimand, Robert W. "monetary economics, history of," "The New Palgrave Dictionary of Economics", 2nd Edition. [http://www.dictionaryofeconomics.com/article?id=pde2008_M000394&q=monetary%20economics%20&topicid=&result_number=1 Abstract.]
* Friedman, Benjamin M. (2008). "money supply," "The New Palgrave Dictionary of Economics", 2nd Edition. [http://www.dictionaryofeconomics.com/article?id=pde2008_M000236&q=monetary%20economics%20&topicid=&result_number=55 Abstract.]
* Friedman, Benjamin N., and F.H. Hahn, ed. (1990). "Handbook of Monetary Economics", v. 1, 2 . Elsevier. Description links for for [http://www.elsevier.com/wps/find/bookdescription.cws_home/601125/description#toc v. 1] and [http://www.elsevier.com/wps/find/bookdescription.cws_home/601126/description#description v. 2.]
* Ireland, Peter N. (2008), "monetary transmission mechanism," "The New Palgrave Dictionary of Economics", 2nd Edition. [http://www.dictionaryofeconomics.com/article?id=pde2008_M000214&q=monetary%20economics%20&topicid=&result_number=2 Abstract.]
* Elgar, Edward., Rabin, Alan A. (2004). "Monetary Theory" MPG Books: London
* Laurence Harris, 'Monetary Theory". New York: McGraw-Hill (1981).
first= John Kenneth
authorlink= John Kenneth Galbraith
title= Money: Whence it Came, Where it Went
isbn= 0735100705 Popular history of monetary institutions.
first= Carl E.
authorlink= Carl E. Walsh
title= Monetary Theory and Policy (2nd ed.)
isbn= 0262232316 Standard graduate-level textbook.
Wikimedia Foundation. 2010.
Look at other dictionaries:
monetary theory — ➔ theory * * * monetary theory UK US noun [U] ► ECONOMICS ideas about how the money supply influences economic activity: »His conservative ideas on monetary theory were a return to old ideas on economics … Financial and business terms
monetary theory — index finance Burton s Legal Thesaurus. William C. Burton. 2006 … Law dictionary
Monetary Theory — A set of ideas about how monetary policy should be conducted within an economy. Monetary theory suggests that different monetary policies can benefit nations depending on their unique set of resources and limitations. It is based on core ideas… … Investment dictionary
Monetary-disequilibrium theory — is basically a product of the Monetarist school mainly represented in the works of Leland Yeager and Austrian macroeconomics. The basic concept of monetary equilibrium(disequilibrium) was however defined in terms of an individual s demand for… … Wikipedia
Monetary circuit theory — is a heterodox theory of monetary economics, particularly money creation, often associated with the post Keynesian school. It holds that money is created endogenously by the banking sector, rather than exogenously by central bank lending; it… … Wikipedia
theory — theo‧ry [ˈθɪəri ǁ ˈθiːəri] noun theories PLURALFORM 1. [countable] an idea or set of ideas that is intended to explain why something happens or how it works: theory of • The book is called An Evolutionary Theory of Economic Change . • The theory… … Financial and business terms
Monetary economics — Economics … Wikipedia
Monetary policy — Part of a series on Government Public finance File:Governmentbhj,i,gu Vedder Highsmith detail 1.jpeg … Wikipedia
Monetary Approach to The Balance of Payments — refers to the key ideas and subsequent research of David Hume conducted in the late 1950s, the 1960s and early 1970s. David Hume presented the price–specie flow mechanism against the Mercantilist approach that stated favorable balance of trade is … Wikipedia
Monetary policy of the Philippines — Monetary policy is the monitoring and control of money supply by a central bank, such as the Federal Reserve Board in the United States of America, and the Bangko Sentral ng Pilipinas in the Philippines. This is used by the government to be able… … Wikipedia