Money Matters: Essay in Honour of Alan Walters PDF
Preview Money Matters: Essay in Honour of Alan Walters
Money Matters Sir Alan Walters Money Matters Essays in Honour of Alan Walters Edited by Patrick Minford Professor of Economics Cardi¤ Business School Cardi¤ University, UK Edward Elgar Cheltenham, UK Northampton, MA, USA [copyright page here] Contents Contributors vii Preface and Acknowledgments ix Introduction x 1 Taking on the Economics Establishment: An Appreciation of Alan Walters the Political Economist 1 Kent Matthews 2 ConsistentExpectations,RationalExpectations,Multiple- Solution Indeterminacies, and Least-Squares Learnability 11 Bennett T. McCallum 3 TheE¢cacy of Monetary Policy in a Multi Sector, Two Country Model 35 MatthewB.Canzoneri,RobertE.CumbyandBehzadT.Diba 4 Model Misspeci…cation, Robustness and Monetary Policy 62 Juha Kilponen and Mark Salmon 5 The Case for Monetary Union in Mercosur 79 Michele Fratianni 6 De Facto Exchange Rate Regimes in Transition Economies: Identi…cation and Determination 104 Jürgen von Hagen and Jizhong Zhou 7 News-Magazine Monetarism 123 Edward Nelson v vi Contents 8 Alan Walters and the Demand for Money: An Empirical Retrospective 148 Kent Matthews, Ivan Paya and David A. Peel 9 The Interaction of Monetary and Fiscal Policy: Solvency and Stabilisation Issues 169 Jagjit S. Chadha and Charles Nolan 10 Monetary Policy under Banking Oligopoly 211 Michael Beenstock 11 Money Targeting 228 Harris Dellas 12 Credit Value-at-Risk Constraints, Credit Rationing and Monetary Policy 243 Jan Frederik Slijkerman, David J.C. Smant and Casper G. de Vries 13 Policy Games and the Optimal Design of Central Banks 251 Andrew Hughes Hallett and Diana N. Weymark 14 Policy Evaluation with a Forward-Looking Model 280 Rouben V. Atoian, Gregory E. Givens and Michael K. Salemi 15 Policy Panel Contributions 306 Appendix: European Monetary Forum Conference in hon- our of Alan Walters, May 2002 345 Contributors Rouben V. Atoian, University of North Carolina Michael Beenstock, Hebrew University of Jerusalem Matthew B. Canzoneri, Georgetown University Jagjit S. Chadha, Clare College, Cambridge Bernard Connolly, AIG Trading Ltd. Robert E. Cumby, Georgetown University Harris Dellas, University of Bern, CEPR and IMOP Behzad T. Diba, Georgetown University Michele Fratianni, Indiana University Gregory E. Givens, University of North Carolina Jürgen von Hagen, Center for European Integration Studies, University of Bonn, Indiana University and CEPR Dale Henderson, Federal Reserve Board, Washington DC Andrew Hughes Hallett, Cardi¤ Business School, Cardi¤ University Juha Kilponen, Bank of Finland Kent Matthews, Cardi¤ Business School, Cardi¤ University Bennett T. McCallum, Carnegie Mellon University and NBER Jacques Melitz, University of Strathclyde Edward Nelson, Federal Reserve Bank of St. Louis Charles Nolan, University of Durham Ivan Paya, Cardi¤ Business School, Cardi¤ University David A. Peel, Cardi¤ Business School, Cardi¤ University Gordon Pepper, Cass Business School, City of London Michael K. Salemi, University of North Carolina Mark Salmon, Cass Business School, City of London Jan Frederik Slijkerman, Erasmus University Rotterdam and Tinbergen Institute David J.C. Smant, Erasmus University Rotterdam and Tinbergen Institute Casper G. de Vries, Erasmus University Rotterdam and Tinbergen Institute Sir Alan Walters, AIG Trading Ltd, and Emeritus Professor, Johns Hopkins University, Baltimore vii viii Contributors Diana N. Weymark, Vanderbilt University Jizhong Zhou, Center for European Integration Studies, University of Bonn Preface and Acknowledgments This book is the revised and edited proceedings of a European Mon- etary Forum conference held in Cardi¤ in May 2002. The European Monetary Forum is a group of academic monetary economists mainly based in northern Europe which meets every nine months or so. This conferencewasmadepossiblebysupportfromseveralpeopleandbodies to whom I extend my warmest thanks. Sir Julian Hodge provided the funding through the Carlyle Trust to set up the Julian Hodge Institute in Applied Macroeconomics within Cardi¤ Business School and Cardi¤ University; the conference was organised under its auspices. Cardi¤ County Council, its leader Russell Goodway and chief executive Byron Davieskindlysponsoredtheopeningpolicypanelanddinner,andmade available the Council’s meeting facilities for the conference sessions and Je¤ Andrews, the Council’s chief o¢cer for European A¤airs, ensured their smooth functioning. Sir Rocco Forte and the St. David’s Hotel sponsored the conference dinner. The Centre for European Integration Studies at the University of Bonn and its Director of Economic Studies, JürgenvonHagen,supportedthetravelexpensesofanumberoftransat- lantic participants. Detailsof the conference and itsparticipants can be found in the Conference Appendix at the end of the book. ThebookwastypesetbyBruceWebb,myBusinessSchoolcolleague, in LATEX; I am most grateful to him and also to Edward Elgar, Luke Adams and the other sta¤ of Edward Elgar Publishing for their help in realising this project. ix Introduction I organized the conference, of which this volume is the product, to pay tribute to someone — my old mentor at the LSE — who was not only an important UKacademic economist but alsoa major in‡uence on the policy thinking of a whole generation of UK economists and politicians. Alan Walters was an innovative academic economist and an exciting teacher of micro and monetary economics; and then as a policy adviser in the 1970s and 1980s he also helped Margaret Thatcher change the course of British history. This volume is devoted particularly to mone- tary economics which was the main strand in this revolution. Kent Matthews writes an introduction to Alan’s academic work in the following chapter — as he says, it had an astonishingly wide span, from the Econometrica article on cost functions all the way to the …rst macroeconomic application of rational expectations in a 1970 Economic Journal article. Though Alan was well-known as a policy adviser, even notorious in some circles especially over the issue of the ERM, his cru- cial role in establishing the success of the 1980s monetary policy rev- olution has not perhaps been widely appreciated. When he arrived to be Thatcher’s personal economic adviser in very early 1981 Britain was in the grip of a severe recession; the ‘wide money’ targets were being greatlyovershot,yetshort-andlong-runinterestrateswereinmiddleto high double digits and there was talk of raising the …scal de…cit above 6 per cent of GDP to counteract their strongly restrictionary e¤ect. He diagnosedtheproblemasoneoflackofcon…dencecombinedwithatech- nically over-restrictive monetary policy as indicated by the collapse in narrow money growth. His suggested policy cure was radical in terms of macroeconomic thinking of the time: the budget de…cit must be cut sharplytorevivecon…dencethatmoneysupplygrowthwouldbeperma- nentlycurbedandatthesametimemoneyconditionsmustbeloosened. Thelogicwasthatofrationalexpectations: in‡ation expectationscould notbebroughtdownwithoutcon…denceinthenewpolicies’permanency, beingunderminedbyfearsof apolicyU-turnfedbythepoor…scalsitu- ation, itself aggravated by the monetary squeeze which had already had its e¤ect in cutting in‡ation sharply. x
Description:The list of books you might like
