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№ 2017/3
1Institute for Economics and Forecasting, NAS of Ukraine
Monetary policy as an institution to ensure confidence in money and banking system: logical-historical analysis
| Ekon. teor. 2017; 3:64-100 | https://doi.org/10.15407/etet2017.03.064 |
ABSTRACT ▼
The article presents the logic of the evolution of monetary policy as an institution to ensure confidence in the currency and banking system from the 7th century BC to 1970th. Understanding of this logic is necessary for policy making as well as for institutional construction. It comprises the stages of recursive support of trust in currency and the authority of the sovereign; quality assurance of coins by deposit-clearing banks; support of foreign expansion of the states by central banks; the birth of banking system stability goal for central banks activity due to the formation of a centralized reserve system; support of domestic confidence in the currency through the foreign confidence; different a combinations of monetary and fiscal policy, depending on the challenges changing the role of government and markets in the economy and changes in the behavior of economic agents responding to public policy.
Keywords: trust in the monetary unit, trust in banking system, coin, sovereign, deposit and settlement bank, state, central bank, monetary policy, fiscal policy, rational expectations, time inconsistency, monetary regime, credibility of monetary policy
JEL: N10
| Article in Russian (pp. 64 - 100) | Download | Downloads :584 |
| Article in Ukrainian (pp. 64 - 100) | Download | Downloads :407 |
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27. Manfred, Pohl (Ed.). (1994). Handbook on the History of European Banks. Frankfurt am Main: Edward Elgar.
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29. Holtfrerich, C.-L. (2008). Monetary policy in Germany since 1948: national tradition, international best practice or ideology? In Touffut, J.-P. (Ed.). Central Banks as Economic Institutions. Cheltenham, Northhampton: Edward Elgar.
30. Katz, S. (1959). Radcliffe Report: Monetary Policy and Debt Management Reconciled? In Board of Governors of Federal Reserve System Division of International Finance. Review of Foreign Developments, November 3.
31. Kydland, F., Prescott, E. (1977). Rules Rather than Discretion: The Inconsistency of Optimal Plans. The Journal of Political Economy, 85: 3, 473-492. doi: https://doi.org/10.1086/260580">doi.org/10.1086/260580">https://doi.org/10.1086/260580
32. Leijonhufvud, A. (1984). Constitutional Constraints on the Monetary Powers of Government. In McKenzie, R.B. (Ed.) Constitutional Economics. Lexington, Mass: Lexington Books.
33. Lovell, M.C. (1957). The Role of the Bank of England as Lender of Last resort in the Crises of the Eighteenth Century. Explorations in Entrepreneurial History, October, 8-21.
34. Lucas, R. (1976). Econometric policy evaluation: A critique. Carnegie-Rochester Conference Series on Public Policy, 1: 1, 19-46. doi: https://doi.org/10.1016/S0167-2231(76)80003-6">doi.org/10.1016/S0167-2231(76)80003-6">https://doi.org/10.1016/S0167-2231(76)80003-6
35. Lucas, R. (1995, December 7). Monetary Neutrality. Prize Lecture. Economic Sciences.
36. McCalum, B. (1984). Credibility and Monetary policy. NBER Working Paper, 1490. doi: https://doi.org/10.3386/w1490">doi.org/10.3386/w1490">https://doi.org/10.3386/w1490
37. Meltzer, A.H. (2009). A History of the Federal Reserve. Vol. 2. Book 2: 1970-1986. Chicago: Chicago University Press.
38. Mishkin, F. (2000). From Monetary Targeting to Inflation Targeting: Lessons from the Industrialized Countries. Graduate School of Business, Columbia University And National Bureau of Economic Research.
39. Muth, J.F. (1961). Rational Expectations and the Theory of Price Movements. Econometrica, Jule, 29: 3, 315-335. doi: https://doi.org/10.2307/1909635">doi.org/10.2307/1909635">https://doi.org/10.2307/1909635
40. Phelps, E. (1967). Phillips curves, expectations of inflation and optimal unemployment over time. Economica, 34, 254-281. doi: https://doi.org/10.2307/2552025">doi.org/10.2307/2552025">https://doi.org/10.2307/2552025
41. The Paper Pound of 1797-1821: A Reprint Of The Bullion Report. With An Introduction By Edwin Cannan. London: P. S. King & Son, Ltd., Orchard House, Westminster, 1919.
42. Wood, J. H. (2005). A History of Central Banking in Great Britain and the United States. Cambridge: Cambridge University Press.
2. Hrytsenko, A.A. (2005). Development of the forms of exchange, value and money. Kyiv: Osnova [in Russian].
3. Hrytsenko, A., Krychevska, T. (2005). The monetary strategy: the way to the effective monetary policy. Article 1. The necessity and prerequisite of forming of the monetary strategy concerning the public relations of central banks. Visnyk NBU – Bulletin of the NBU, 11, 8-18 [in Ukrainian].
4. Krychevska, T.O. (2015). History of the institutions of monetary regulation in the United States. Article 2. The Federal Reserve in search of balance between gold standard protector, bank of banks and bank of government functions (1913-1951). Ekon. teor. – Economic theory, 1, 50-73 [in Ukrainian].
5. Krychevska, T.O. (2016a). History of the institutions of monetary regulation in the United States. Article 3. The formation of countercyclical monetary policy and the ascent of Keynesianism in the United States (1951-1979). Ekon. teor. – Economic theory, 1, 67-85 in Ukrainian].
6. Krychevska, T.O. (2016b). History of the institutions of monetary regulation in the United States. Article 4. From the formation of systemic anti-inflationary policy to encouraging the economy with the help of a creative financial sector (1977-2007). Ekon. teor. – Economic theory, 2, 46-62 [in Ukrainian].
7. Krychevska, T.O. (2016). Monetary policy as part of social contract: the logical and historical analysis. Ekonomist – Economist, 5, 4-11 [in Ukrainian].
8. Mankiv, G. (2000). Macroeconomics. Kyiv: Osnovy [in Ukrainian].
9. Bundesbank: monetary policy problems and instruments (1993). Frankfurt: Special'nye izdanija Nemeckogo federal'nogo banka, 7 [in Russian].
10. Samujel'son, P. (2010). Inside the economist’s mind: Conversation with eminent economists. 2-nd ed. Moscow: OOO "Junajted Press" [in Russian].
11. Ujerta de Soto, J. (2008). Money, bank credit and economic cycles. Cheljabinsk: Socium [in Russian].
12. Shaht, Ja. (2011). Confessions of the Old Wizard. Moscow: Centrpoligraf [in Russian].
13. 100 Years Federal Reserve System (1951). Joint announcement by the Secretary of the Treasure and the Chairman of the Board of Governors and the Federal Open Market Committee, of the Federal Reserve System. Release Morning Newspapers, Sunday, March 4.
14. Andreades, A. (1909). History of the Bank of England 1640-1903. London: P.S. King and Son, Orchard House, Westminster.
15. Barsky, R.B., Kilian, L. (2001). Do We Really Know that Oil Caused the Great Stagflation? A Monetary Alternative. NBER Macroeconomics Annual, 16, 137-183. doi: https://doi.org/10.1086/654439">doi.org/10.1086/654439">https://doi.org/10.1086/654439
16. Batini, N., Nelson, E. (2005, March). The U.K.’s Rocky Road to Stability. Federal Reserve Bank of St. Louis Working Paper 020A. Retrieved from research.stlouisfed.org/wp/2005/2005-020.pdf
17. Bordo, M., Siklos, P. (2015, January). Central Bank Credibility: An Historical and Quantitative Exploration. NBER Working Paper.
18. Burns, A.F. (1979). The Anguish of Central Banking. The 1979 Per Jacobsson Lecture. Belgrade: Per Jacobsson Foundation.
19. Capie, F., Fischer, S., et al. (1994). The Future of Central Banking: The Tercentenary Symposium of the Bank of England. Cambridge: Cambridge University Press.
20. Davies, G. (2002). A History of Money From Ancient Times to the Present Day. 3rd. ed. Cardiff: University of Wales Press.
21. Eichengreen, B. (1995). Golden fetters: The Gold Standard and the Great Depression, 1919-1939. New York, Oxford: Oxford University Press.
22. Fellner, W. (1979). The Credibility Effect and Rational Expectations: Implications of the Gramlich Study. Brookings Papers on Economic Activity, 1, 167-189. doi: https://doi.org/10.2307/2534307">doi.org/10.2307/2534307">https://doi.org/10.2307/2534307
23. Fergusson, A. (1975). When Money Dies: The Nightmare of the Weimar Collapse. London: William Kimber.
24. Friedman, M., Schwartz, A. J. (1963). A Monetary History of the United States, 1867-1960. Princeton: Princeton University Press.
25. Friedman, M. (1968). The role of monetary policy. American Economic Review, 68 (1), 1-17.
26. Hammes, D., Wills, D. (2005). Black Gold The End of Bretton Woods and the Oil-Price Shocks of the 1970s. The Independent Review, Spring, IX, 4, 501-511.
27. Manfred, Pohl (Ed.). (1994). Handbook on the History of European Banks. Frankfurt am Main: Edward Elgar.
28. Hetzel, R. (2008). Monetary Policy of the Federal Reserve: A History. Cambridge: Cambridge University Press. doi: https://doi.org/10.1017/CBO9780511754173">doi.org/10.1017/CBO9780511754173">https://doi.org/10.1017/CBO9780511754173
29. Holtfrerich, C.-L. (2008). Monetary policy in Germany since 1948: national tradition, international best practice or ideology? In Touffut, J.-P. (Ed.). Central Banks as Economic Institutions. Cheltenham, Northhampton: Edward Elgar.
30. Katz, S. (1959). Radcliffe Report: Monetary Policy and Debt Management Reconciled? In Board of Governors of Federal Reserve System Division of International Finance. Review of Foreign Developments, November 3.
31. Kydland, F., Prescott, E. (1977). Rules Rather than Discretion: The Inconsistency of Optimal Plans. The Journal of Political Economy, 85: 3, 473-492. doi: https://doi.org/10.1086/260580">doi.org/10.1086/260580">https://doi.org/10.1086/260580
32. Leijonhufvud, A. (1984). Constitutional Constraints on the Monetary Powers of Government. In McKenzie, R.B. (Ed.) Constitutional Economics. Lexington, Mass: Lexington Books.
33. Lovell, M.C. (1957). The Role of the Bank of England as Lender of Last resort in the Crises of the Eighteenth Century. Explorations in Entrepreneurial History, October, 8-21.
34. Lucas, R. (1976). Econometric policy evaluation: A critique. Carnegie-Rochester Conference Series on Public Policy, 1: 1, 19-46. doi: https://doi.org/10.1016/S0167-2231(76)80003-6">doi.org/10.1016/S0167-2231(76)80003-6">https://doi.org/10.1016/S0167-2231(76)80003-6
35. Lucas, R. (1995, December 7). Monetary Neutrality. Prize Lecture. Economic Sciences.
36. McCalum, B. (1984). Credibility and Monetary policy. NBER Working Paper, 1490. doi: https://doi.org/10.3386/w1490">doi.org/10.3386/w1490">https://doi.org/10.3386/w1490
37. Meltzer, A.H. (2009). A History of the Federal Reserve. Vol. 2. Book 2: 1970-1986. Chicago: Chicago University Press.
38. Mishkin, F. (2000). From Monetary Targeting to Inflation Targeting: Lessons from the Industrialized Countries. Graduate School of Business, Columbia University And National Bureau of Economic Research.
39. Muth, J.F. (1961). Rational Expectations and the Theory of Price Movements. Econometrica, Jule, 29: 3, 315-335. doi: https://doi.org/10.2307/1909635">doi.org/10.2307/1909635">https://doi.org/10.2307/1909635
40. Phelps, E. (1967). Phillips curves, expectations of inflation and optimal unemployment over time. Economica, 34, 254-281. doi: https://doi.org/10.2307/2552025">doi.org/10.2307/2552025">https://doi.org/10.2307/2552025
41. The Paper Pound of 1797-1821: A Reprint Of The Bullion Report. With An Introduction By Edwin Cannan. London: P. S. King & Son, Ltd., Orchard House, Westminster, 1919.
42. Wood, J. H. (2005). A History of Central Banking in Great Britain and the United States. Cambridge: Cambridge University Press.
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