Monetary economics : theories, evidence and policy

The aim of this second edition remains that of the first, but updated a decade, i.e. to provide a basic introduction to the main subject matter and controversies of monetary economics as they existed at the beginning of the 1980s. The changes that have been made in content from the first edition are extensive, reflecting the substantial academic developments that have taken place in the discipline, and the changing institutional environment. Although several sections of the first edition have been retained, the changes that have been made are so substantial that this is perhaps best regarded as a new book. Certainly no useful purpose would be served by itemizing the detailed changes from the first edition. Instead, we can simply state that the changes are designed to:

(1) Reflect major theoretical developments, such as the rational expectations 'revolution'

(2) Give more emphasis to policy issues and problems.
(3) Alter the treatment of international economics so as to give more explicit attention to the monetary aspects, and to recognize the move to floating exchange rates.

The book is intended primarily as an undergraduate text is monetary economics, although it should also be useful to postgraduates reading monetary theory and policy, undergraduates reading macroeconomics, and undergraduates reading international monetary economics. 'Monetary' economics, perhaps more than most other branches of economics, is taught in a variety of ways, sometimes as a separate subject, sometimes as part of a broader macroeconomics course. As a result no single textbook can structure its material in a way which will coincide with the order in which that material is taught in more than a few courses. The content of this book is therefore organized around a number of 'topics' which commonly feature in monetary economics and related courses. This does, however, result in some overlap of material, e.g. rational expectations 'appears' significantly in Chapters 2, 7, 9, 11. To avoid wasteful duplication, we have made fairly extensive use of cross-referencing. The student is also advised to make full use of the comprehensive index.