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New Monetarist Economics: methods
TLDR
New Monetarism as discussed by the authors is a recent body of work on money, banking, payments, and asset markets, and it has been used to study several issues, including the cost of inflation, liquidity and asset trading.Abstract:
This essay articulates the principles and practices of New Monetarism, our label for a recent body of work on money, banking, payments, and asset markets. We first discuss methodological issues distinguishing our approach from others: New Monetarism has something in common with Old Monetarism, but there are also important differences; it has little in common with Keynesianism. We describe the principles of these schools and contrast them with our approach. To show how it works, in practice, we build a benchmark New Monetarist model, and use it to study several issues, including the cost of inflation, liquidity and asset trading. We also develop a new model of banking.read more
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The Financial Cycle and Macroeconomics: What Have We Learnt?
TL;DR: The authors highlighted the stylised empirical features of the financial cycle, conjectures as to what it may take to model it satisfactorily, and considered its policy implications in the discussion of policy.
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Liquidity: A New Monetarist Perspective
TL;DR: The authors surveys the new monetarist approach to liquidity, emphasizing the micro structure of frictional transactions, and studies how institutions like monetary exchange, credit arrangements, or intermediation facilitate the exchange process.
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Information, Liquidity, Asset Prices, and Monetary Policy
TL;DR: In this paper, the effects of monetary policy on asset prices, allocations, and welfare are analyzed, and it is shown that small changes in information may generate large responses in asset prices and allocations.
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Liquidity, Monetary Policy, and the Financial Crisis: A New Monetarist Approach †
TL;DR: A model of public and private liquidity integrating financial intermediation theory with a New Monetarist monetary framework is presented in this article. But the model is not suitable for the analysis of monetary policy.
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New Monetarist Economics: Models
TL;DR: In this article, the authors discuss some of the models used in New Monetarist economics, which is our label for a body of recent work on money, banking, payments systems, asset markets, and related topics.
References
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Book
General Theory of Employment, Interest and Money
TL;DR: In this article, a general theory of the rate of interest was proposed, and the subjective and objective factors of the propensity to consume and the multiplier were considered, as well as the psychological and business incentives to invest.
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Bank Runs, Deposit Insurance, and Liquidity
TL;DR: The authors showed that bank deposit contracts can provide allocations superior to those of exchange markets, offering an explanation of how banks subject to runs can attract deposits, and showed that there are circumstances when government provision of deposit insurance can produce superior contracts.
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Staggered prices in a utility-maximizing framework
TL;DR: In this article, the authors developed a model of staggered prices along the lines of Phelps (1978) and Taylor (1979, 1980), but utilizing an analytically more tractable price-setting technology.
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Financial Intermediation and Delegated Monitoring
TL;DR: In this paper, the authors developed a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders, and presented a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary.
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