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Name Index A

Alchian, A. 14 Ali, M. 131 Allen, R. G. D. 58, 71, 72, 78, 88,

143, 158, 159 Allias, M. 103 Archibald, G. C. 167 Arrow, K. 93 Arrowsmith, D. 53, 72, 94, 163, 186

8

Bagehot, W. 19, 21 Bailey, M. J. 82, 121 Baily, M. N. 92, 110 Barro, R. 35, 74, 75, 76, 90, 102, 107,

119, 121, 123 Baumol, W. 83 Bernoulli, D. 72 Biddle, N. 21 Birman, I. 123, 124 Black, F. 14 Bodin, J. 5 Bomberger, W. 99 Bondi, H. 28 Bootie, R. 182 Branson, W. 77, lll, 124, 146, 158 Braudel, F. 171, 172 Breckenridge, S. 4 Bridgman,P. 7 Bryan, W. J. 56 Buchanan, J. 107, 108, 120 Ruiter, W. 78, 79 Burmeister, E. 81, 85 Burstein, M. 13, 16, 24, 25, 27, 48,

49, 66, 74, 82, 85, 120, 125, 126, 134, 161, 167, 168, 171, 181

Bushaw, D. 49

c Cagan, P. 72, 103

Carlson, K. 113 Carmichael, J. 107, 120, 123 Chang, W. 133 Chick, V. 134, 185 Christ, C. 119 Cipolla, C. 14 Clower, R. 3, 25, 27, 49, 120, 167 Coleridge, S. 83 Cuthbertson, K. 160

D

D'Abro, A. 157 David, P. 113 Domar, E. 84 Dornbusch, R. 146, 158 Douglas (Major) 10, 13

E

Eckstein, 0. 103, 157 Einaudi, L. 4, 7, 16, 26 Einzig, P. 161 Eisner, R. 76 Eliot, T. S. 186 Epstein, L. 154 Evans, P. 71

F

Fama, E. 14 Farrer (Lord) 4, 6 Feldstein, M. 107, 120, 121, 123 Fetter, F. W. 20 Fisher, I. 29, 35, 56, 126, 127, 128,

164 French, A. 28, 95 Frenkel, J. 146 Friedman, B. 102 Friedman, M. 7, 10, 15, 20, 22, 29,

32,45,48,49, 56, 59,60,68, 70, 72, 73, 74,83,91,98,99,100, 102,

202

Name Index 203

103, 108, 109, 112, 113, 114, 159, 173, 181

Frisch, H. 83, 98, 100, 101, 103

G

Galileo (Galileo Galilei) 17 Gaulle, Charles de 7 Gesell, S. 5 Girton, L. 14, 164 Giscard, V. 162 Gordon, R. 66, I 00 Greenfield, R. 14 Gurley, J. 105, 120, 130, 134

H

Hadjmichalikakis, M. 33 Hahn, F. 24, 93, 97, 114 Hamada, K. 156, 157 Hammond, B. 20, 21 Hardy, C. 48 Harrod, R. 84, 109, 115, 143 Hawtrey, R. 4, 13, 55, 172 Hayek, F. von 3, 5, 8, 16, 26, 171,

176 Heath, E. 160, 161 Hicks, J. 34, 46, 66, 75, 103 Howitt, P. 94 Hume, D. 164 Hynes, J. A. 154

J

Jackson, Andrew 21 James, Henry 83 Johnson, H. 112, 130, 158

K

Kaidar, N. 103 Kamien, M. 72 Karpov, A. 89 Kasparov, G. 89 Kemeny, J. 168 Kemmerer, E. 55, 56 Keynes, J. M. 3, 10, 13, 22, 29, 30,

34, 46, 48, 68, 73, 81, 84, 89, 98, 99, 102, 109, 112, 125, 154, 161, 179

Klein, B. 8, 16, 26, 176

Knapp, G. 3, 4 Knight, F. 49, 81, 112, 113 Kydland, F. 78, 80

L

Laidler, D. 103 Lange, 0. 46, 47 Laughlin, L. 164 Leijonhufvud, A. 12, 81, 82, 84, 89,

94, 95, 98, 132, 134, 154, 181 Leontief, W. 127 Lerner, A. 48,112,173 Lerner, E. 103 Lipsey, R. 167 Lucas, C. M. 21 Lucas, R. 7, 80, 88, 91, 102

M

McCallum, B. I 03 McKinnon, R. 176 Makinen, G. 35, 99, 130, 131 Mann, F. 3, 4 Metzler, L. 24, 35, 73, 91, 106, 107 Mill, J. S. 185 Miller, M. 24, 35, 134 Mints, L. 18, 60 Mises, L von 3 Mitterrand, F. 161 Modigliani, F. 24, 35, 59, 63, 75, 76,

134 Mundell, R. 157, 187 Muth, J. 32, 88

N

Nagatani, K. 123 Nelson, R. 124 Newlyn, W. 182 Newton, Isaac I 00 Niehans,\J. 3 Nussbaum, A. 4

0

Obstfeld, M. 88 Okun, A. 90, I 03, 157 Ostroy, J. 3

204 Name Index

p

Papademos, L. 36, 63 Parkin, M. 103, 172 Patinkin, D. 5, 7, 97, 120, 130 Pesek, B. 130, 131 Phelps, E. 98, I 00, 107 Pieper, P. 76 Pigou, A. C. 56, 117, 125, 126, 128 Pinsky, A. 17, 157 Place, C. 53, 72, 94, 163, 186 Poole, W. 59, 66, 67, 70, 71 Pope, Alexander 179 Prescott, E. 78, 80

Q Quandt, R. I 79

R

Regan, D. 147 Ricardo, D. 105 Robertson, D. 14, 29, 34, 35, 55, 125 Robinson, J. II, 24 Rogoff, K. 89 Roper, D. 14, 164 Rueff, J. 48, 54

s Sakurai, M. 156, 157 Salant, S. 39 Samuelson, P. 81, 84, 97, 113, 114,

123, 135 Sargent, T. 59,60, 71,89,91,92,103 Saving, T. 130, 131 Sayers, R. 21 Scad ding, J. 113 Schwartz, A. 20, 22, 56, 59, 60, 70 Schwartz, N. 72 Senior, N. 48 Shaw, E. 105, 120, 130, 134 Sheffrin, S. 79, 80

Smith, Adam 165, 169, 171 Smith, B. 171 Smyslov, V. 89 Snell, J. 168 Sokolnikoff, I. 135 Spencer, R. 113 Spraos, J. 161 Swoboda, A. 157, 158

T

Telser, L. II, 177, 178, 188 Temin, P. 21 Thompson, G. 168 Thornton, H. 125 Thiinen, J. von 112 Tinbergen, J. 116 Tobin, J. 15, 24, 25, 29, 30, 37, 38,

40, 48, 70, 73, 75, 80, 81, 88, 89, 93, 102, 109, 110, 114, 117, 118, 119, 121, 123, 125, 126, 127, 128, 132, 133, 134

Townsend, R. 81, 84 Toynbee, A. 4, 172 Triffin, R. 13 Truell, P. 189

v Viner,J. 172,184,185

w Wallace, N. 59, 60, 89, 91, 92, 103,

134, 169 Waugh, E. 177 White, L. 14 Wicksell,K. 14,61, 117,154 Working, E. J. 177

y

Yaeger, L. 14 Yavorsky, B. 17, 157

Subject Index A

Acceleration of prices 98 Affine systems 86 After shocks 90 Animal spirits 85, 92 Anti-bullionists 184 Asset markets (dominant in foreign-

exchange-rate determination) 154-5, 157

Asymmetric matrices 135 Asymmetry (in commodity-money

models) 48fT Asymptotic convergence (improper to

economics) 87

B

Bancor 12, 13 Banking Policy and the Price Level (see

also D. H. Robertson) 34-5 Banking (v. Currency) school, 15, 58,

120, 184, 185 Bank of England

Banking and Issue Depts separated 185

restriction of convertibility of notes of 20

Bank Rate 72, 73 Bank war 21 Bimetallism 46, 54-7 Bootstrap theory of interest

(Keynes's) 112 Bretton Woods system 155 Brick monetary standard (cf C. 0.

Hardy) 48-9 and Keynes's system 48 precludes involuntary unemploy­

ment 49 Bubbles 145-6

and elastic expectations 146 Bullionists 183, 184

Burden of the money supply 126

c Call options 179 Capital account (of the balance of

payments) 145, 147, 151-3, 157 Central bank credit 30, 39, 135 Chancellor's letter of intent (to the

IMF) 182 Chequeries 32 Clearing Union (model) 12fT, 104,

172 Closed (v. open) loop control 15,

58fT Cobweb problem 88 Coinage acts 4, 54 Colonial monetary history 7fT, 14,

171-2 Common Market (EEC) 188 Competing currencies 16fT, 26, 170,

173, 175 Complementarity (substitutability) of

financial assets 132-7 complementarity of money and

equities 133 substitution between bonds and

equities 136 Consols II Continuous market clearing 75 Convertibility (restrictions on) 17fT,

20, 81 Corridor (Leijonhufvud's) 84, 94-6

related example from medical research 94

related examples from physics 94-6

Cost of capital 154 and the monetary base 137

Cost-push inflation 155, 160-1 Covered capital movements 148

205

206 Subject Index

Crowding out, I 07ff Friedman's intertemporal analysis,

108-9 a Keynesian case, 110-11 in the Knightian world, 112-13 in an open Keynesian model, 141-2 and tax cuts 109-10

Cumulative process (Wicksellian) 61, 181

Currency choice 16, 171 Currency (v. Banking) School 15,

27, 120, 184, 185 Current account (of the balance of

payments) 144, 145, 151-3, 157, 158

D

Debt and money 4, 6, 119-20 Denationised money 173-5, 177-8

effects of demand shifts in such systems 173

and public debt management 174 Devisen 172 Discounting 21 Domestic Credit Expansion (DCE)

E

169, 172, 182-3 and the Currency School 183-5 growth of v. monetary growth 182 mathematical model of 183

Equilibrium 80 strong sense of 80 weak sense of 80

Error learning 71 European Currency Unit (ECU)

188-9 Exchange on Hamburg 184 Expectations (in macroeconomic

F

theory) 84fT and convergence 87-9 and economic philosophy 87-8 of monetary growth 26 regressive 145-6

Factor mobility 187

Fads (manias, etc.) 81 Federal Funds Market 21 Federal Funds Rate 105 Federal Reserve System 18, 75

early commitment to the Real Bills Doctrine (or Commercial Loan Theory of Banking) 22

Feedback 92, 156 Feedback rules and open v. closed

loop control 78-9 Fiat paper 14 Finance and monetary theory (cf

Gurley & Shaw; Radcliffe), 105 Financial assets (part of a trichro­

mism) 105 Fiscal policy (monetary dimension

of) 125 importance of in a dynamic version

of an open Keynesian system 142-3

Fisher effects 117 Foci 186 Forced saving 34 Foreign assets 182 Foreign debt

and Brazil eta/. 152-3 equilibrium relationships of with

macro-quantities 151-3 fundamental relationships concern­

ing 151-2 and the transfer problem 152-3

Foreign-denominated securities 145, 153

Forward contracts 178 Forward discounts (on foreign ex­

change) 148, 150 Forward transactions in currencies

103, 177fT liquidity of markets in which such

transactions occur 177-8 and physical delivery 177 and price squeezes 177

Free Silver (cf the Crime of 1873) 56 Full-bodied coinage 14 Futures contracts 178 Futures markets (in currencies) 177,

178 liquidity of and the role of the US

dollar 178

Subject Index 207

Futures transactions in currencies 177, 178

G

Galileo's relativity principle 16 Gold clauses 6 Gold/Paper Systems (see paper 1

specie systems) Golden Rule (of accumulation) 116 Government securities (and money)

10, 25 Guide posts (for wages and prices)

103

H

Hicksian stability 46, 54 High powered money 98 Homeostatic mechanisms 94 Homogeneity (of excess demand

I

functions) and commodity money 45, 46-7 and money illusion 25

Imaginary money 4, 7 Indirect exchange (v. barter) 3 Inertial expectations 149 Inflation 16

actual v. expected 101 and excess demand 98, I 00 as a feedback phenomenon I 02

(perceived as monetary de­preciation 8)

and fiscal policy I 04 and monetary ;fiscal policy I 04-6 when money has an indexed yield

97,99 Inflationary gap 98-9 Inflation tax 98-9

and interest-bearing money 99 and the LatTer Curve 99 pivoting on bonds 99-100

Inside (v. outside) money 126, 130-2

Interest on Money 29fT, 114 shatters traditional money-supply

paradigms 37

supplies additional relative prices 37, 39

Tobin's analysis of 38-40 Interest parity 103, 148-51

conforming to rational expec-tations 149-51

dichotomised 150 models based on 148-51 not conforming to rational

expectations 148-9 and speculation 149

Interest on public debt 113 Interest rate (v. monetary aggregate)

targeting 71-3 multiple interest rates 71 studied via the calculus of

variations 72 studied via an error-learning

model 71-2 studied via simultaneous differen­

tial equations 72-3 Ireland (currency policy of) 188 IS shocks

J

effects with flexible central-bank de­posit rates 39

and the role of monetary policy 70-1

in space of higher dimension 38-9

Jacobians 199, 133, 134, 135, 136, 145, 149, 167

K

Knightian capital theory 112-13, 116

Knight's model of capital accumu­lation 49

L

LatTer curve 99, 110 Law of one price 144 Legal tender 3, 5, 6, 16, 55 Leontief's parable (re real cash bal-

ances) 127, 129-30 Limping standards 14

208 Subject Index

Liquidity 11, 179, 181 idea of entails money-illusory bias

11 in posse 181 and quasi banking 180 and the Radcliffe Report 185

Liquidity base 105 Liquidity preference 68, 71 Liquidity preference (absolute) 83 Liquidity trap 37 LM 66, 67, 68, ll7

M

shocks 40 vertical if interest is paid on

money(?) 29

Marginal efficiency of capital 112 Matrix methods 167-9 Means of payment 9 Metallic standards 5 Metric(s) 14, 16, 26, 97, 179

choice of in open economies 188 Mint ratios 54--6

and circulation at par (see also bimetallism) 55--6

Modigliani-Miller theorem 35 applied to public debt 24, 134 monetary application 24

Monetarism 73, 104, 106, 118 Monetary-aggregate (v. interest-rate)

targeting 58-9, 67-71 mixed strategies 67-8 Poole's analysis of 67-71 poolian algebra 68-70 relative to stochastic vibration of IS

and LM 69 Monetary approach to the balance of

payments 170 Monetary base 137 Monetary ;fiscal policy I 06 Monetary policy (eschewing monet-

ary theories of the real rate of interest) 70-1

Monetary properties (v. money as property) 8fT

Monetisation of assets (through op­tions dealing) 178

Monetisation of deficits 103

Money of account 4fT, 55--6, 173 Money, definition of (Mill's com­

ments) 185 Money-growth 17,56, 103,114,149

wage-thrust impelled 103 Money illusion 5, 11, 25 Money market funds 104 Money as a residue of credit 77 Money as a social contrivance 130 Money supply

N

creation of j-S in open systems 174-5

evolving in closed-loop systems 180

measurement of distorted by extra­national transactions 174-5

measurement of distorted by for­ward transactions 174

theory of 77-8

Natural rate of interest 56, 154 Neutrality of money 5, 97 New classical macroeconomics 80,

89 and market-clearing by assumption

89 Newton's first law of motion 100 Newton's second law of motion 100 Nominal income 15

and the monetary base 1 06 Non-simple systems of differential

equations 66

0

Oil (price) shocks 74--6 One-hundred-percent-reserve bank-

ing 18 Open-loop monetary control 58, 75,

102-3, 175 Open Keynesian systems

and crowding-out 141-2 dynamic version of(without capital

flows) 142--4 relation to Harrod's natural-rate­

of-growth concept 143 Open macroeconomic models

Subject Index 209

comparative statics of 145 (with elastic expectations 145)

dynamical models of 147-8,162-3 sans full-employment stipulations

144-5; under a full-employment stipulation 146-7 (with elastic expectations 147; and rational expectations 147; and US public sector borrowing require­ments 147)

and rational expectations 146 and the Wicksell connection 155

Open-market operations 24-5, 137 Optimal currency zones 187-8

macroeconomic-based analysis of 187-8

microeconomic-based analysis of 188

Optimal monetary /fiscal policies (models of) 114-19

Optimal supply of money 10, 113-14

and interest-bearing money 114 and saving shoeleather 113

Options markets 178 Organic properties of economic be­

haviour (as per Marshall) 87 Oscillations

Allen's analysis of and Friedman's formal analysis 159

forced 158, 159 intrinsic 158, 159

Overlapping generations model 97, 123

p

Palmer rule 184-5 Panics (and convertibility) 18fT

primary and secondary 19 Paper/specie systems 169-73ff

Adam Smith's version of 171 in 18th-century British America

171-2 imperfect-substitution case 169-

70 'n' economy model version 170-1 perfect substitution case 169 in 16th-century Antwerp 171, 172

Peel's Act (Bank Charter Act) 20, 184-5

Pesek and Saving controversy (under­lying fallacies) 131-2

Pfolmar (the imaginary currency unit) 188

Phillips Curve 100-2 and 'accelerationism' 101 and actual v. expected inflation

101-2 Pigou effects 83, 117-18, 125-9 Policy ineffectiveness 90

and rational expectations 91-3 Price flexibility 46-7 Principle of Reflux (cf Banking

School, Real Bills Doctrine, Commercial Loan Theory of Banking) 58, 59-60

formal analysis of 60-1 (in closed models 63--6; in open models 62-3)

Prisoner's dilemma 87 Property rights assignment(s) 130 Public debt

burden of shifted intertemporally ants and grasshoppers 120-1

complementary with real capital(?) 112

effects of public debt policy on portfolios III-12

and indirect consumer loans 121 invariance of real equilibrium

against 107, 119-21 Modigliani-Miller theorems of

134 as net wealth 107, 119-21 proportion to real output or capital

in the long run Ill Purchasing power of money (deter­

mined by cost of produc­tion) 49, 53, 164

Put options 179

Q

Quantity theory of money 97, 103, 105

Laughlin's version of v. Fisher's, 164-5

210 Subject Index

Quantity theory of money --continued

mathematical illustrations of (matrix methods (including Markov chains) 167-9; specia­lised to open economies 165-9)

in open economies 164-9 Quasi-banking 175-81

R

Rational expectations 31, 81, 146, 148, 149-51, 159

and the cobweb problem 32-3 and convergence 81, 86-7, 89 and model-consistent expectations

81 and open-market operations 33 and speculation 81, 85 -7 and the underlying problem in

economic philosophy 87-9 Real balance effect(s) 83, 126

of falling prices of pure services 83 Irving Fisher's version of 126-9 logical fallacy behind I 07, 131 A. C. Pigou's version of 126-9 James Tobin's models of 126-9

Real bills doctrine 59~ early commitment of the Federal

Reserve to 22 Reference frames 27-8 Rescontro (Rescontre) 172 Relativity principles 27-8 Reserve pyramiding 18, 104 Resonance 157, 159 Restriction of specie payments 183 Ricardian equivalence 24, 119

s Saddle-point stability 87 Second Bank of the United States

(BUS) 14 Seigneurage 10, 14, 15, 98, 99, 130,

131, 170, 176 Simple differential equation systems

186 v. non-simple systems 66

Small open economies 144 Snake (the European currency

snake) 188 Social Security (old-age pensions)

effects on capital accumulation 121--4

invariance of real equilibrium against social security system(?) 122-3

intrusion of real-world elements into theory of 123

theory of and the overlapping­generations model 123

Soviet productivity (effects of liquid asset accumulation on) 123--4

Special Drawing Rights (SDRs) 13, 189

Specie flow mechanism 75, 158, 164 Spectral analysis 157 Speculation 60, 81, 145--6

closed models encompassing 85-7

v. enterprise 84 Speculators 29, 31, 40, 41, 81

affecting transmission of economic fluctuations 158

between goods and bonds 29 and interest parity 148-51 in tulips 84-5

Spielberg phenomenon 130-l Spot rates 148 Squeezes (in forward and options

markets) 180 Stability

and commodity money 47 Hicksian 46, 54 and price flexibility 46-7

Stabilisation and discretion (v. 'rules') 68 and Friedman's formal analysis

73--4 policy 91

Stagflation 155, 156, 157 in France 161-2 and Mr Heath's fate 160-l in open economies 161

Stamped money I 0 Standards of value 9, 10 State theory of money 3

Subject Index 211

Stock-adjustment problems 107ff described by elementary differential

equations 107-8 Stock-flow modelling 49ff

and commodity money 51-3 and explicit dynamic analysis

52-4 reduction to canonical form 50-1 and stock-flow equilibrium 50

Stores of values 11 ff Supply shocks (and money-supply­

control principles) 59, 74-7 Supply-side economics (Keynesian

case for) Ill Support operations (including the

Continental Illinois Bank rescue) 18, 19-20

Symmetalism 45, 46 Symmetrical matrices 135

T

Temporary equilibrium analysis 32 Trade-cycle models 35 Traded, and non-traded, goods 144 Transfer problem 19, 152-3 Transmission (of trade (business)

cycles) under fixed (v. flexible) exchange

rates 158 and forced oscillations 158, 159 and rational expectations 158 and stagflation 156-7

Transversality condition 37 Traverse (Hicksian) 72, 77

Treasury bills 10, 30 Tulip manias 84-5

u Unemployment (employment) 82-4

natural rate of 90, 10 1 Unified financial intermediary sector

33-4 Union of sets containing banking and

non-banking agents 33

v Valor impostus 4 Vector field 95 Vehicle currencies 176 Velocity of monetary circulation 40,

76, 106 Venn diagram 8

w Wage cuts (and aggregate demand)

128-9 Walrasian systems 22-4, 26-7 Wicksell Connection, the 154, 181

translated for an open-economy problem 155

Wicksell effects 117-18 Wicksellian cumulative process(es)

61, 181 Wicksellian deflation 181

y

Young's theorem 135