Monetary Theory and Policy from Hume and Smith to Wicksell
Money, Credit, and the Economy

This book provides a survey of the major developments in monetary theory and policy from Hume and Smith to Wicksell.

Arie Arnon (Author)

9781107642737, Cambridge University Press

Paperback / softback, published 27 August 2012

450 pages
22.9 x 15 x 2.8 cm, 0.68 kg

'Arie Arnon's history of monetary theory and policy from Hume to Wicksell provides an excellent roadmap to understanding the nature and evolution of the British tradition. The book is well researched and clearly written. Every chapter is good; some, such as Chapter 11 on the Currency School, are simply outstanding. This is a book that monetary historians will want to acquire.' Neil T. Skaggs, Illinois State University

This book provides a comprehensive survey of the major developments in monetary theory and policy from David Hume and Adam Smith to Walter Bagehot and Knut Wicksell. In particular, it seeks to explain why it took so long for a theory of central banking to penetrate mainstream thought. The book investigates how major monetary theorists understood the roles of the invisible and visible hands in money, credit and banking; what they thought about rules and discretion and the role played by commodity-money in their conceptualizations; whether or not they distinguished between the two different roles carried out via the financial system - making payments efficiently within the exchange process and facilitating intermediation in the capital market; how they perceived the influence of the monetary system on macroeconomic aggregates such as the price level, output and accumulation of wealth; and finally, what they thought about monetary policy.

Introduction
Part I. Analytical and Historical Foundations: 1. Monetary theory circa 1750: David Hume
2. Mid-eighteenth-century British financial system
3. Adam Smith: the case for laissez faire in money and banking
4. 'Monetary theories of credit' in exchange
Part II. Debating Monetary Theory under Inconvertibility: 5. New reality: the restriction period, 1797–1821
6. Boyd versus Baring: the early round in the bullion debate
7. Henry Thornton: ahead of his times
8. Ricardo versus Bosanquet: the famous round in the Bullion debate
9. 'Credit theories of money' in exchange and intermediation
Part III. Debating: Laissez Faire, Rules and Discretion: 10. From the resumption to 1837: more crises
11. The currency school trio: Loyd, Torrens, Norman
12. The banking school trio: Tooke, Fullarton, Wilson
13. Neither discretion nor rules: Joplin and the free banking school
Part IV. The Road to Defensive Central Banking: 14. Bagehot and a new conventional wisdom
15. Does Karl Marx fit in?
16. Marshall and bi-metallism
Part V. A New Beginning: Towards Active Central Banking: 17. Wicksell's innovative monetary theory
18. The puzzling slow rise of a theory of central banking: between the lender of last resort, passive and active monetary policy.

Subject Areas: Economic history [KCZ], Macroeconomics [KCB]