Money and Banking
This course follows the parallel development of the history of monetary theory and monetary institutions. The course begins with the early quantity theory and examines the development of mercantilist monetary systems and early banking, concentrating on the English system. Controlling the issue of notes and the role of "reflux" are examined in light of monetarism and its claims. The spread of banking and the role of central banking are examined, first with regard to the English system, then the U.S. system. The role of the Fed in the 1930s is examined, especially considering Friedman and Schwartz, then the shift to war finance and the development of "modern money," giving rise to theories of endogenous money. The evolution of Hicks' thinking, from the 1S-LM to endogenous money, is traced and contrasted with the transformation of "old Keynesians" into "new Keynesians."