This book presents an alternative approach to monetary theory that differs from the General Theory of Keynes, the Monetarism of Friedman, and the New Classicism of Lucas. Particular attention is given to the work of Hawtrey and his analysis of financial crises and his explanation of the Great Depression. The unduly neglected monetary theory of Hawtrey is examined in the context of his contemporaries Keynes and Hayek and the subsequent contributions of Friedman and of the Monetary Approach to the Balance of Payments. Studies in the History of Monetary Theory aims to highlight the misunderstandings of the quantity theory and the price-specie-flow mechanism and to explain their unfortunate consequences for the subsequent development of monetary theory. The book is relevant to researchers, students, and policymakers interested in the history of economic thought, monetary theory, and monetary policy.
Author(s): David Glasner
Series: Palgrave Studies In The History Of Economic Thought
Edition: 1
Publisher: Palgrave Macmillan
Year: 2021
Language: English
Commentary: TruePDF
Pages: 521
Tags: History Of Economic Thought: Methodology Macroeconomics: Monetary Economics: Financial Economics Political Economy: Economic Systems
Preface
Acknowledgments
Praise for Studies in the History of Monetary Theory
Contents
About the Authors
List of Figures
List of Tables
1 Introduction
References
Part I Classical Monetary Theory
2 A Reinterpretation of Classical Monetary Theory
2.1 Introduction
2.2 A Model of a Competitive Money Supply
2.3 The Classical Theory and the Quantity Theory
2.4 The Role of Competition in Classical Monetary Theory
2.5 Modern Versions of Classical Monetary Theory
2.6 Conclusion
References
3 On Some Classical Monetary Controversies
3.1 Introduction
3.2 A Classical Monetary Model
3.3 Hume and Smith on Banking and the Price-Specie-Flow Mechanism
3.4 The Currency School and the Banking School
3.5 Say’s Law
3.6 Cairnes on the Effects of the Australian Gold Discoveries
3.7 Conclusion
References
4 The Real-Bills Doctrine in the Light of the Law of Reflux
4.1 Introduction
4.2 The Real-Bills Doctrine Since Adam Smith
4.3 The Law of Reflux
4.4 The Law of Reflux Creates the Problem That the Real-Bills Doctrine Tries to Solve
4.5 The Validity of the Real-Bills Doctrine
References
5 Classical Monetary Theory and the Quantity Theory
5.1 Introduction
5.2 Blaug on Classical Monetary Theory
5.3 O’Brien on the Law of One Price, Purchasing-Power-Parity, and the Quantity Theory in Classical Economics
5.4 Local Price-Level Differences and the Gold Standard
5.5 The Classical Theory of Banking, the Law of Reflux, and the Quantity Theory
5.6 Monetary Policy in an Endogenous Cycle
5.7 Conclusion
References
6 Monetary Disequilibrium and the Demand for Money in Ricardo and Thornton
6.1 Introduction
6.2 Ricardo on Depreciation and Overissue
6.3 Thornton on the Natural Rate of Interest and Inflation
6.4 Conclusion
References
7 The Humean and Smithian Traditions in Monetary Theory
7.1 Introduction
7.2 Overissue by Private Banks
7.3 Price-Specie-Flow Mechanism
7.4 The Real-Bills Doctrine, the Scope of Banking and Lender of Last Resort
7.5 Rules Versus Discretion in Monetary Policy
7.6 Conclusion
References
8 Rules Versus Discretion in Monetary Policy Historically Contemplated
8.1 The Bullionist Debates
8.2 The Currency-School-Banking-School Debates
8.3 The Undoing of the First Quantity Rule
8.4 An International Gold Standard
8.5 The Quantity Rule Redux: Inventing the Rules Versus Discretion Dichotomy
8.6 Friedman, from 100-Percent-Reserve Banking to the k-Percent Rule
8.7 Rules Versus Discretion or Rules and Discretion
8.8 Conclusion
References
9 Say’s Law and the Classical Theory of Depressions
9.1 Introduction
9.2 The Classical Conception of Say’s Law
9.3 The Classical Objections to Say’s Law
The Supply of Commodities May Reflect a Demand to Hold Money Rather than a Demand for Other Commodities
Entrepreneurial Error Can Cause Temporary Levels of Unsustainably High Output and Employment
Say’s Law Is Inconsistent with the Observed Existence of States of Depression
9.4 Modern Objections to Say’s Law
The Supply of Commodities May Reflect a Demand for Future Commodities Rather than a Demand for Current Commodities
Say’s Law and Walras’s Law
Say’s Law Implies that any Level of Aggregate Income Is Consistent with Macroeconomic Equilibrium
9.5 Say’s Law in a Theory of Depression
9.6 Say’s Law Violated
9.7 Conclusion
References
Part II Hawtrey, Keynes, and Hayek
10 Hawtrey’s Good and Bad Trade: A Centenary Retrospective
10.1 Introduction
10.2 The Structure and Argument of Good and Bad Trade
10.3 Innovations in Good and Bad Trade
10.4 Financial Crises
10.5 The Price-Specie-Flow Mechanism
10.6 Conclusion
References
11 Hawtrey and Keynes
11.1 Introduction
11.2 The Genoa Monetary Conference and Reconstruction of the Gold Standard
11.3 Britain’s 1925 Return to Gold at the Prewar Sterling–Dollar Parity
11.4 Hawtrey and the “Treasury View”
11.5 Bank Rate as an Instrument of Monetary Policy
11.6 Hawtrey’s Review of Keynes’s Treatise on Money
11.7 Hawtrey and the General Theory
11.8 Conclusion
References
12 Where Keynes Went Wrong
12.1 Introduction
12.2 The Prewar Parity
The Treatise on Money
From Treatise to General Theory
12.3 Unemployment and the Great Depression
12.4 An Unnecessary Revolution
References
13 Debt, Deflation, the Great Depression and the Gold Standard (with Ronald W. Batchelder)
13.1 Introduction
13.2 The International Price Level Under the Gold Standard
13.3 Monetary Disorder After World War I and the Restoration of the Gold Standard
13.4 War Debts, Reparations, Tariffs, and the Demand for Gold
13.5 The Role of the Federal Reserve System in the Great Depression
13.6 The Politics of Debt, Deflation, and the Gold Standard
13.7 Evaluating the Evidence on the Great Depression
13.8 Conclusion
References
14 Pre-Keynesian Monetary Theories of the Great Depression: Whatever Happened to Hawtrey and Cassel? (with Ronald W. Batchelder)
14.1 Introduction
14.2 Hawtrey and Cassel on the Theory of International Prices Under the Prewar Gold Standard
14.3 Hawtrey and Cassel on the Postwar Gold Standard
14.4 The Transformation of the Gold-Standard Monetary Regime Advocated by Hawtrey and Cassel
14.5 The Onset of the Great Depression
14.6 The Austrian Challenge and the Keynesian Revolution
14.7 The Monetarist Counterrevolution
14.8 Conclusion
References
15 The Sraffa-Hayek Debate on the Natural Rate of Interest (with Paul Zimmerman)
15.1 Introduction
15.2 Background Leading Up to the Debate
15.3 Sraffa’s Critique
15.4 Deconstructing Sraffa’s Critique
15.5 Hayek’s Response
15.6 Keynes to the Rescue?
15.7 Conclusion
References
16 Hayek, Deflation, Gold and Nihilism
16.1 Hayek’s Lament for the Gold Standard
16.2 Humean Misunderstandings of the Gold Standard
16.3 Hayekian Fallacies about the Interwar Gold Standard
16.4 Hayek and the Bank of France
16.5 Hayek on Primary and Secondary Deflation
16.6 Deflation and Nihilism
16.7 Conclusion
References
17 Hayek, Hicks, Radner, and Four Equilibrium Concepts: Intertemporal, Sequential, Temporary, and Rational-Expectations
17.1 The Concept of Intertemporal Equilibrium
17.2 Hayek and Intertemporal Equilibrium
17.3 Correct Versus Perfect Foresight in Intertemporal Equilibrium
17.4 Radner on the Equilibrium of Plans, Prices, and Price Expectations
17.5 Hayek, Hicks, and Temporary Equilibrium
17.6 Hayek, Radner, and Rational Expectations
17.7 Conclusion
References
Index
