In the previous post we find the reading list for the nominally second course for the money field at M.I.T. However typically the courses were taken in the reverse order (Monetary Economics II (14.463) in the Fall followed by Monetary Economics I (14.462) in the Spring.
I will go out on a limb here and assert that Ben Bernanke’s graduate training in monetary economics was, if not exactly these two courses, then observationally equivalent content-wise to this and the previous course.
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Earlier versions
Albert Ando and Franco Modigliani’s reading list for monetary economics at M.I.T. in 1960/61.
William Poole’s 1964 reading list at Johns Hopkins University for Monetary Theory.
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14.462—Monetary Economics
Franco Modigliani and William Poole
Spring 1977
Asterisks indicate required reading
Abbreviations
AER: American Economic Review
BPEA: Brookings Papers on Economic Activity
EI: Economic Inquiry
IER: International Economic Review
JEL: Journal of Economic Literature
JF: Journal of Finance
JMCB: Journal of Money, Credit, and Banking
JME: Journal of Monetary Economics
JPE: Journal of Political Economy
NBER: National Bureau of Economic Research
NEER: New England Economic Review
OQM: Milton Friedman, The Optimum Quantity of Money and Other Essays
QJE: Quarterly Journal of Economics
General References
Shapiro, Solomon and White. Money and Banking. Fifth edition. Hot, Rinehart and Winston, 1968.
Jacobs, Farwell and Heave. Financial Institutions. Fifth edition. Irwin, 1972.
I. Introduction—The Nature of Money and Other Claims
Einzig, Paul, Primitive Money, Pergamon Press. 1966.
*Federal Reserve System, Flow of Funds Accounts, 1967-1975. Washington, D.C.
*Friedman, Milton and Anna J. Schwartz, Monetary Statistics of the United States, pp. 86-198.
*Patinkin, Donald, “Money and Wealth: A Review Article,” JEL 7 (Dec. 1969), 1140-60.
Robertson, Dennis Money. Cambridge University Press. Chapters 1-3.
*Tobin, James, Manuscript. Chapters 1 and 2.
II. The Supply of Money and the Balance Sheets of Commercial Banks
Brunner, Karl and Allan Meltzer, “Some Further Investigations of Supply and Demand Functions for Money,” JF, May 1964.
Burger, Albert, The Money Supply Process. Wadsworth, 1971.
Cagan, Phillip, Determinants and Effects of Changes in the Stock of Money, 1876-1960. NBER, 1965. Chapters 2 and 3.
Federal Reserve Bank of Boston, Controlling Monetary Aggregates, I and II. Conference Series Number 1 and 9.
Fouzek, P.G., Foreign Central Banking, Federal Reserve Bank of New York.
Frost, Peter, and Thomas Sargent, “Money Market Rates, the Discount Rate and Borrowing from the Federal Reserve,” JMCB, February 1970.
Goldfeld, Stephan and Edward Kane, “The Determinants of Member Bank Borrowing,” JF, September 1966.
Hester, Donald and James Pierce, Bank Management and Portfolio Behavior, Cowles Foundation, 1975.
*Meade, James, “The Amount of Money and the Banking System,” reprinted in Readings in Monetary Theory, American Economic Association Series.
*Meek, Paul, Open Market Operations, Federal Reserve Bank of New York, 1973.
*Modigliani, Franco, Robert Rasche and J. Phillip Cooper, “Central Bank Policy, the Money Supply and Short Term Interest Rates,” JMCB, May 1970.
*Poole, William, “Commercial Bank Reserve Management in a Stochastic Model: Implications for Monetary Policy,” JF 23 (Dec. 1968), pp. 769-91.
Poole, William and Charles Lieberman, “Improving Monetary Control,” BPEA, 1972:2.
*Thomson, Thomas, James Pierce and Robert Parry, “A Monthly Money Market Model,” JMCB, November 1975.
Tobin, James, Manuscript, Chapter 8.
___________, “Commercial Banks as Creators of Money,” Chapter 16 of his book, Macroeconomics.
Willis, Parker, Federal Funds Market, Federal Reserve Bank of Boston, 1970.
III. Other Financial Intermediaries and their Balance Sheets
Committee on Banking, Currency and Housing, House of Representatives, “Financial Institutions and the Nation’s Economy,” November 1975.
Dougal, Herbert E., Capital Markets and Institutions, Prentice Hall, Third edition, 1975.
Federal Reserve Bank of Boston, Policies for a More Competitive Financial System, Conference Series #8.
Federal Reserve Staff Study: Ways to Moderate Fluctuations in Housing Construction (Board of Governors of the Federal Reserve System, 1972); see especially papers by Gramley, Fisher and Seigman, and Poole.
Goldsmith, Raymond, Financial Instiutions, Random House, 1968.
Gurley, John and Edward Shaw, Money in a Theory of Finance, Brookings, 1960.
Guttentag, Jack and Robert Lindsay, “The Uniqueness of Commercial Banks,” JPE, September/October 1968.
New Mortgage Designs for Stable Housing in an Inflationary Environment (Federal Reserve Bank of Boston Conference Series, No. 14); see especially papers by Lessard and Modigliani, and those reviewing foreign experience.)
*Patinkin, Donald, “Financial Intermediaries and the Logical Structure of Monetary Theory,” AER, March 1961.
*Treasury, “Recommendations for Change in the U.S. Financial System,” Washington, D.C., August 1973.
IV. The Demand for Money
Note: Familiarity with the material on the demand for money covered in 14.451 and 14.463 will be assumed.
Brunner, Karl and Allan Meltzer, op. cit.
Chow, Gregory, “On the Long-Run and Short-Run Demand for Money,” JPE, April 1966.
Fisher, Irving, The Purchasing Power of Money, Macmillan, 1931. Chapters 1-4 and 8.
Friedman, Milton, “The Quantity Theory of Money, A Restatement,” OQM, Aldine, 1969.
*___________, “The Demand for Money: Some Theoretical and Empirical Results,” OQM.
___________, “Interest Rates and the Demand for Money,” OQM.
*Goldfeld, Stephen, “The Demand for Money Revisited,” BPEA, 1973:3.
*___________, “The Case of the Missing Money,” BPEA, 1976:3.
Gould, John P. and Charles R. Nelson, “The Stochastic Structure of the Velocity of Money,” AER, 64 (June 1974), pp. 405-18.
Hicks, John, “A Suggestion for Simplifying the Theory of Money,” Readings in Monetary Theory, op. cit.
Keynes, J.M., “A Treatise on Money,” The Collected Writings, St. Martin’s Press, 1971.
___________, The General Theory, Chapters 13, 15, 17.
Laidler, D.E.W., The Demand for Money: Theories and Evidence, International Textbook Company, 1969.
Miller, Merton and Daniel Orr, “A Model of the Demand for Money by Firms,” QJE, August 1966.
Modigliani, Franco, “Liquidity Preference,” International Encyclopedia of the Social Sciences, Vol. 9, MacMillan Company & Free Press, 1968, pp. 394-409.
___________, Rasche and Cooper, op. cit.
Tobin, James, “The Interest Elasticity of [the] Transactions Demand for Cash,” Chapter 14 of Macroeconomics.
V. Interest Rate Determination and Term Structure
*Fama, Eugene, Short-Term Interest Rates as Predictors of inflation,” AER, June 1975.
Fisher, Irving, The Theory of Interest, Macmillan, 1930.
Fisher, Lawrence, “Determinants of the Risk Premium on Corporate Bonds,” JPE, June 1959.
*Friedman, Benjamin, “Financial Flow Variables and the Short-Run Determination of Long-Term Interest Rates,” unpublished.
*___________, “Substitution and Expectation Effects on Bond Supply and the Long-Term Interest Rate,” unpublished.
Kane, Edward and Burton Malkiel, “Expectations and Interest Rates: A Cross-Sectional Test,” JPE, August 1969.
*Lutz, Friedrich, “The Structure of Interest Rates,” in AEA Readings in the Theory of Income Distribution.
Malkiel, Burton, The Term Structure of Interest Rates, Princeton University Press, 1966.
Modigliani, Rasche and Cooper, op. cit.
*Modigliani, Franco and Robert Shiller, “Inflation, Rational Expectations and the Term Structure of Interest Rates,” Economica, February 1973, pp. 12-43.
___________, and Richard Sutch, “Debt Management and the Term Structure of Interest Rates,” JPE, August 1967, Supplement No. 4, pp. 569-589.
Nelson, Charles, The Term Structure of Interest Rates, Basic Books, 1972.
___________, and William Schwert, “On Testing the Hypothesis that the Real Rate of Interest is Constant,” AER, 1977 (forthcoming).
Rutledge, John, A Monetarist Model of Inflationary Expectations, Lexington Books, 1974.
Roll, Richard W., The Behavior of Interest Rates.
Tobin, James, “An Essay on the Principles of Debt Management,” Chapter 21 in Macroeconomics.
VI. The Transmission Mechanism, etc.
Note: Familiarity with the standard IS-LM and related models, as covered in 14.451, will be assumed.
Andersen, Leonall and Keith Carlson, “A Monetarist-Model for Economic Stabilization,” Federal Reserve Bank of St. Louis Review, April 1970.
Ando, Albert and Franco Modigliani, “Econometric Analysis of Stabilization Policies,” AER, May 1969.
___________, and ___________, Robert Rasche and Stephen Turnovsky, “On the Role of Expectations of Price and Technological Change in an Investment Function,” IER, June 1974.
Baily, Martin Neil, “Contract Theory and the Moderation of Inflationary Expectations by Recession and by Controls,” BPEA, 1976:3.
Bischoff, Charles, “Business Investment in the 1970’s: A Comparison of Models,” BPEA, 1971:1.
Blinder, Alan and Robert Solow, “Analytic Foundations of Fiscal Policy,” in Economics of Public Finance, Brookings Institution, 1974.
*De Menil, George and Jared Enzler, “Prices and Wages in the FMP Econometric Model,” in The Econometrics of Price Determination, Otto Eckstein, ed., 1970.
*Friedman, Milton, “The Role of Monetary Policy,” in OQM.
___________, and Anna Schwartz, The Great Contraction, Princeton, 1965.
*Gordon, Robert J., “Recent Developments in the Theory of Inflation and Unemployment,” JME, 2, (April 1976), pp. 185-219.
Gramlich, Edward, “The Usefulness of Monetary and Fiscal Policy as Discretionary Stabilization Tools,” JMCB, May 1971.
Jaffee, Dwight and Franco Modigliani, “A Theory and Test of Credit Rationing,” AER, December 1969.
*Holt, Charles, “Job Search, Phillips’ Wage Relation, and Union Influence: Theory and Evidence,” in E.S. Phelps, ed., Microeconomic Foundations of Employment and Inflation Theory, Norton, 1970.
Keeton, William, “An Analysis of Interest Rate Ceilings,” unpublished.
*Lucas, Robert, “Some International Evidence on Output-Inflation Tradeoffs,” AER, June 1972.
___________, “An Equilibrium Model of the Business Cycle,” JPE, 83 (Dec. 1975), pp. 113-44.
Modigliani, Franco, “Monetary Policy and Consumption: …,” in Consumer Spending and Monetary Policy, The Linkages, Federal Reserve Bank of Boston, Conference Series #5, June 1971.
___________, “The Channels of Monetary Policy in the FMP Econometric Model of the U.S.,” in Modelling the Economy, G.A. Renton, ed., Heinemann Educational Books, 1975.
___________, and Lucas Papademos, “Monetary Policy for the Coming Quarters: The Conflicting Views,” NEER, March/April 1976.
*___________, “Models of the Economy and Optimal Stabilization Policies,” June 1976, unpublished.
Mortenson, Dale, “A Theory of Wage and Employment Dynamics,” in Phelps, op. cit.
Sargent, Thomas, “Rational Expectations, the Real Rate of Interest, and the Natural Rate of Unemployment,”BPEA, 1973:2.
VII. Monetary Policy: Optimal Control and Related Issues
Athans, Michael, “The Discrete Time Linear-Quadratic-Gaussian Stochastic Control Problem,” Annals of Economics and Social Measurement, October 1973, pp. 449-493.
*Brainard, William, “Uncertainty and the Effectiveness of Policy,” AER, May 1967.
Fischer, Stanley and J. Phillip Cooper, “Stabilization Policy and Lags,” JPE, July/August 1973.
*Friedman, Benjamin, “Targets, Instruments, and Indicators of Monetary Policy,” JME, October 1975.
Holbrook, Robert S., “Optimal Economic Policy and the Problem of Instrument Instability,” AER, March 1972.
Pierce, James L., “Quantitative Analysis for Decisions at the Federal Reserve,” Annals of Economic and Social Measurement, January 1974.
*Poole, William, “Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model,” QJE, May 1970.
___________, “The Making of Monetary Policy: Description and Analysis,” EI, 13 (June 1975), pp. 253-65.
___________, “Benefits and Costs of Stable Monetary Growth,” in Karl Brunner and Allan H. Meltzer, eds., Institutional Arrangements and the Inflation Problems (Carnegie-Rochester Conference Series on Public Policy, Vol. 3, 1976).
VIII. Monetary Policy: Rational Expectations and Related issues
Barro, Robert J., “Rational Expectations and the Role of Monetary Policy,” JME, 2 (January 1976), pp. 1-32.
___________, and Stanley Fischer “Recent Developments in Monetary Theory,” JME, 2 (April 1976), pp. 133-67.
Fischer, Stanley, “Recent Developments in Monetary Theory,” AER, 65 (May 1975), pp. 157-66.
*Lucas, Robert E., “Econometric Policy Evaluation: A Critique,” in Karl Brunner and Allan H. Meltzer, eds., The Phillips Curve and Labor Markets (Carnegie-Rochester Conference Series on Public Policy, Vol. 1; Supp. To JME).
*Modigliani, Franco, “The Monetarist Controversy Or, Should We Foresake Stabilization Policies?” (AEA Presidential Address).
*Muth, John F., “Rational Expectations and the Theory of Price Movements,” Econometrica, 29 (July 1961), pp. 315-35.
*Poole, William, “Rational Expectations in the Macro Model,” BPEA, 2, 1976, pp. 463-514.
*Sargent, Thomas J. and Neil Wallace, “’Rational’ Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule,” JPE, 83 (April 1975), pp. 241-54.
___________ and ___________, “Rational Expectations and the Theory of Economic Policy,” JME, 2 (April 1976), pp. 169-83.
Source: Copy of mimeographed course reading list from the files of Irwin L. Collier. Provided by Robert Dohner (our friendship goes back to our internships at the Nixon Council of Economic Advisers in the year of Watergate).
Image Sources: Nobel Prize Web Page for Franco Modigliani; William Poole at the Federal Reserve Centennial, 2014.