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Money: Theory and Practice

  • Jin Cao
  • Gerhard Illing
Textbook
  • 1.7k Downloads

Part of the Springer Texts in Business and Economics book series (STBE)

Table of contents

  1. Front Matter
    Pages i-xiv
  2. Jin Cao, Gerhard Illing
    Pages 1-45
  3. Money and Equilibrium in the Long Run

    1. Front Matter
      Pages 47-47
    2. Jin Cao, Gerhard Illing
      Pages 49-92
  4. Monetary Policy in the Short Run

    1. Front Matter
      Pages 119-119
    2. Jin Cao, Gerhard Illing
      Pages 121-143
    3. Jin Cao, Gerhard Illing
      Pages 145-184
    4. Jin Cao, Gerhard Illing
      Pages 185-220
  5. Part III

    1. Front Matter
      Pages 251-252
    2. Jin Cao, Gerhard Illing
      Pages 253-279
    3. Jin Cao, Gerhard Illing
      Pages 281-355
    4. Jin Cao, Gerhard Illing
      Pages 357-406

About this book

Introduction

This textbook provides an introduction to modern monetary economics for advanced undergraduates, highlighting the lessons learned from the recent financial crisis. The book presents both the core New Keynesian model and recent advances, taking into account financial frictions, and discusses recent research on an intuitive level based on simple static and two-period models, but also prepares readers for an extension to a truly dynamic analysis. Further, it offers a systematic perspective on monetary policy, covering a wide range of models to help readers gain a better understanding of controversial issues. Part I examines the long-run perspective, addressing classical monetary policy issues such as determination of the price level and interaction between monetary and fiscal policy. Part II introduces the core New Keynesian model, characterizing optimal monetary policy to stabilize short-term shocks. It discusses rules vs. discretion and the challenges arising from control errors, imperfect information and robustness issues. It also analyzes optimal control in the presence of an effective lower bound. Part III focuses on modelling financial frictions. It identifies the transmission mechanisms of monetary policy via banking and introduces models with incomplete markets, principal-agent problems, maturity mismatch and leverage cycles, to show why investors’ and intermediaries’ own stakes play a key role in lending with pro-cyclical features. In addition, it presents a tractable model for handling liquidity management and demonstrates that the need to sell assets in crisis amplifies the volatility of the real economy. Lastly, the book discusses the relation between monetary policy and financial stability, addressing systemic risk and the role of macro-prudential regulation.  



Keywords

Monetary Economics New Keynesian Macroeconomics Financial Stability Monetary Policy Macroprudential Regulation Financial Regulation Money Equilibrium

Authors and affiliations

  • Jin Cao
    • 1
  • Gerhard Illing
    • 2
  1. 1.Research DepartmentNorges BankOsloNorway
  2. 2.Department of EconomicsLMU MunichMunichGermany

Bibliographic information

  • DOI https://doi.org/10.1007/978-3-030-19697-4
  • Copyright Information Springer Nature Switzerland AG 2019
  • Publisher Name Springer, Cham
  • eBook Packages Economics and Finance
  • Print ISBN 978-3-030-19696-7
  • Online ISBN 978-3-030-19697-4
  • Series Print ISSN 2192-4333
  • Series Online ISSN 2192-4341
  • Buy this book on publisher's site