Tag: Poole

Johns Hopkins. Ten-Year Projects and Outlook for Department. 1968-1978

Post author By Irwin Collier
Post date 2024-01-28

The following ten-year plan (1968-1978) proposal for the department of political economy of Johns Hopkins was most likely drafted by senior members of the department, though the precise author(s) is not clear from the document itself. The bottom line of this plan is a request to be allowed to expand the deparment’s faculty and graduate student body by by half and by two-thirds, respectively. Otherwise the department feared the loss of its national reputation due to having a reduced scope and scale.

The plan is at least as interesting for its obiter dicta regarding e.g., air-conditioning, computer terminals, secretarial staff, etc.

_______________________

TEN-YEAR PROJECTS AND OUTLOOK FOR
DEPARTMENT OF POLITICAL ECONOMY
[Draft, 1967]

I. Introduction and Summary

The Department of Political Economy, like the rest of the University, has concentrated on small numbers and high quality in its research and instructional programs. It is our intention to continue that tradition.
During the early postwar period, this Department produced as large a group of outstanding young economists as almost any university in the country. Its small faculty included several of the country’s most eminent economists. Between 1958 and 1961 the Department was plagued with resignations of senior faculty. At the same time resources available at other universities were growing rapidly. As a result the Department lost its former status as a major producer of research and scholars. Since 1961, the Department has steadily been rebuilt and is again able to attract its share of outstanding faculty and graduate students. But the Department still suffers to some extent from the factors responsible for its earlier troubles: its small size and limited resource base.
The Department now consists of 11 faculty and 45 resident Ph.D. candidates.
The program outlined in subsequent sections is designed to strengthen the Department by increasing Its size and financial base, while still permitting it to reap the advantages of its relatively small size.
During the next decade, the Department should grow to about 18 faculty members, or about 50%. Its Ph.D. candidates should grow to about 75, or by about two-thirds. Such growth is essential to add stability to the research and instructional programs, and to permit us to cover the growing number of specialties in the subject.
Growth will be expensive. Faculty salaries and graduate fellowships will continue to rise. And no university can retain excellence, let alone improve its position, without substantial budgetary increases. Within a decade, the Department’s budget for salaries and fellowships should almost triple.

II. Immediate Needs and Plans

A. In 1967-68, the Department has ten full-time faculty members, one joint appointment with Operations Research, and one faculty member whose major appointment is in the School of Public Health. (A second joint appointment with Public Health was made in Spring 1967, but the appointee will be in Pakistan for two years.) We have two vacancies. One is a professorship, and results from the Department’s having been permitted to replace Professor Evans prior to his retirement. We have appointed a visiting Professor to this post for 1968-69. The other vacant post is an Assistant Professorship, created in the spring of 1967.
The Department’s full-time faculty ought to expand to about 18 during the next decade. Three purposes would be served by such an expansion. First, it would provide the Department with more depth in the central specialties of economic theory and quantitative methods, so that a resignation or leave of absence would not disrupt the instructional program. Second, it would permit us to make appointments in important specialties not adequately covered by existing faculty. The inevitable increase in specialization through time makes gradual expansion necessary. Third, it would enable us to discharge our obligations to the instructional programs in international relations more adequately.
The Department is now actively seeking funds for the establishment of a Center for International Economic Studies within the Department. This Center would provide a focus for graduate instruction and research in the areas of international trade and economic development. The Center would provide a major substantive focus for the Department in addition to its present focus on economic theory and quantitative methods. In addition, it would help to fill a pressing social need, since the development of poor countries is perhaps the most pressing social problem of our time. Finally, it would permit us to exploit the unique advantages of the University’s proximity to Washington.
Although we are now strong in international economics, we are weak in economic development. Hence, a specialist in economic development is our most pressing need in terms of our proposed Center, our own graduate program, and our participation in the international relations programs. Our next highest priority is in the area of industrial organization, in which we now offer only one course in alternate years. Other fields in which we need additional strength are economic growth, public finance, private finance, econometrics, managerial economics, and Soviet-type economics.
Our needs are not equally urgent in all these areas. And not every specialty requires a separate appointment. Individual scholars often have interests in two or more specialties. Finally, the importance of particular specialties, and the interests of individual faculty members change gradually through time.

B. The most important research facilities for the Economics Department are the library and computational facilities. In both cases, the special needs of the Department will make it increasingly important in the coming decade to supplement the facilities available to the University as a whole.
For many years the Department has felt the need for a workroom where copies of major journals and reference books could be kept. In an important sense, the technical journals and data sources play the role in economics that the laboratory plays in an experimental. science. The movement of the library from Gilman Hall has imposed a major burden on faculty in the Department. In addition, faculty and graduate students in economics are now sufficiently numerous that duplicate copies of major journals are essential. We have made a small beginning toward meeting our library needs by establishing a workroom in our new quarters. A very limited number of journals is being purchased from research funds. In the coming years it will be important to expand the number of journals in our workroom, and to add major reference and data volumes. If a new social science building is constructed, or if the Department is able to expand its quarters as a result of the construction of a humanities building, a departmental library should be a major planning item.
The Department now has 6 desk calculators for use by faculty and students. Most are old and should be replaced with more modern machines within a few years. In the next decade we should at least double the number of calculators available. Some of our faculty now make frequent use of one or more of the real time-saving consoles located around the University. Within a short time, it will be important for the Department to have one or more such consoles in or near the Department area.
The Department now has two full-time and one half-time secretary. The half-time secretary is financed from research funds. Within a year or two she will need to be full time. Within a decade we will probably need five full-time secretaries. We need one additional electric typewriter this fall, and at least three modern tape recorders. During the coming years wo will need several additional typewriters and recorders, and other minor items of office equipment.

C. In the spring of 1967, we substantially revised both our undergraduate and graduate curricula. At the undergraduate level, the major change was to permit most courses to be taken after only two semesters economic theory rather than three as was previously required. This opened up, several courses in the Department to international relations majors and others outside the economics major. At the graduate level, the major change was to provide a more concentrated and integrated program in economic theory for first-year Ph.D. candidates.
During the last few years, the number of undergraduate registrations in economics courses has grown much more rapidly than the undergraduate student body. This is shown in the following table of selected registrations.

	1963-64	1964-65	1965-66	1966-67
18.1	241	339	351	358
18.2	50	85	121	107
18.3	50	79	94	108
18.301-302	51	56	52	74
Total	392	559	618	647

This has necessitated our giving some courses each semester which were previously given in alternate semesters. Presumably, future growth in undergraduate registrations will more nearly approximate the growth in the student body. During the next few years our major need at the undergraduate level is to add a few specialized courses that will be available to students with a limited background in economics. Planned economics and urban economics are examples of such courses.
Our Ph.D. program is now too small. We do not have enough students to justify graduate courses in specialties which should be covered in a high quality graduate program, and we do not have enough faculty to offer the courses. We thus need to expand the graduate enrollment and the faculty simultaneously in order to be able to fill gaps in our graduate program in areas such as economic development, fiscal policy and industrial organization.

D. This Department is far smaller than any other major graduate department in economics. The next smallest, Princeton, is approximately the size that our projections indicate we will be in 10 years. Others are much larger.
We do not aspire to match the size and growth of most of the departments with which we compete for faculty and graduate students. We are firmly convinced of the advantages of smallness. But until very recently our size was almost below that required for viability. And we see clear advantages in some further growth, which would still retain the benefits of our relatively small size.

III. In this section I will discuss the undergraduate and graduate instructional programs, and faculty research activities in that order.

Undergraduates can either concentrate or major in economics. Although there is some tendency for better students to major rather than concentrate, some very able students choose the less intensive program. A stronger tendency is for those whose goal is a Ph.D. program in economics to major, and for others to concentrate.
An average senior class contains about 15 concentrators in economics. Some of these graduates take jobs, but many go to graduate school in business, law and economics.
An average senior class contains about 10 majors in economics. Although a few majors take jobs upon graduation, most attend graduate school in economics or business. And the program is designed with this group in mind. In recent years, our majors have undertaken successful graduate study at Chicago, Stanford, M.I.T., Johns Hopkins and other leading institutions. The Department’s requirements of a major include four semesters of economic theory, economic history, a year of statistics, a year of mathematics, a senior essay, and work on one or more advanced fields. We feel that our majors are as well prepared for graduate study as those at any university in the country.
For many years, the goal of our Ph.D. program has been to provide thorough training in economic theory, quantitative methods, and a small number of substantive fields to a small group of high quality students, most of whom intend to enter teaching and research posts. In the years 1950-1966, 63 people received the Ph.D. for work in this Department. This comes to 3.7 per year, but there is a slight upward trend, and we have given about five per year in recent years. Among them are some of the leading academic economists of the postwar generation. Our graduates hold posts at Yale, Chicago, Minnesota, Northwestern, Purdue, Wisconsin and other leading United States universities. They also hold major academic posts in the U.K., Israel, Japan and Australia.
In the early postwar period, Johns Hopkins had among its Ph.D. candidates more than its share of the best students who studied economics. This resulted from the high quality of the faculty, the small and personal nature of the Ph.D. program, and the ability of the Department to offer fellowships that were larger than those offered by competing institutions. In the late 1950’s, this situation changed, partly because of the loss of most of the Department’s senior faculty. Since 1981, the Department has been substantially rebuilt; and is again among the leading economics departments in this country. We have greatly improved the quality of the student body, and are now getting about our share of the best graduate students, but we have not regained our former edge. To do so is the goal of the plans outlined in other sections of this report.
In the Political Economy Department, as elsewhere in the University, most faculty research is basic rather than applied. Within that framework, however, a wide spectrum of subjects and techniques is encompassed. Some of the research is purely theoretical, employing mathematical and logical tools to improve our understanding of economic phenomenon. Most of the research, however, is quantitative, employing not only economic theory but also statistical methods and data.

IV. Relationship to the Hopkins community

A. At the undergraduate level, the enrollment in economics courses has grown rapidly in recent years. Nearly every undergraduate now takes at least one economics course. And for several years we have had more than a hundred students per year in each of our second and third courses in economic theory. About 50 students per year enroll in our course in current economic problems. In 1967-68, the Department will offer 11 semester courses at the 0-99 level, and 13 semester courses at the 300-level, all of them open to undergraduates who are not economics majors.
At the graduate level our Ph.D. candidates frequently take courses in the Departments of Mathematics, Statistics, and Operations Research. Less frequently they take courses in the Departments of Political Science, History, Geography, and Social Relations. Frequently, 300- and 600-level courses in economics are taken by Ph.D. candidates in Operations Research, Environmental Sciences, Statistics, and Geography. Less frequently, they are taken by students in History, Social Relations and Political Science. Sometimes, students from SAIS take our courses in international economics and economic development.
In recent years, there has been a considerable increase in the exchange of graduate students between this Department and others for course work. We expect this trend to continue and feel that it should be encouraged.

B. The Center for International Studies will be established within the Department of Political Economy. However, many problems within the Center’s purview require interdisciplinary study, and we hope to use the Center as a vehicle for joint teaching and research programs. SAIS is the most natural partner for such ventures, but we hope to explore possibilities with Homewood departments also.

C. The Department takes an active part in the A.B.-M.A. and Ph.D. programs in international relations. We give year courses in international economics and economic development mainly for students in these programs. In our curriculum revision last spring, we reduced the prerequisites for these courses to make them more accessible to international relations specialists. We are generally pleased with our success in staffing the economics part of the international relations program. However, we feel a need for a major appointment in economic development before we can be fully satisfied with our contribution.
The Political Economy Department has one joint appointment with the Operations Research Department. In addition, wo have two faculty members in the Department whose major appointments are in the School of Public Health. The Department has no fixed policy regarding joint appointments. Those that wo have are successful because of special circumstances in which such an arrangement is in the interests of all parties. We expect that such circumstances will arise again. But we think it unwise to plan for certain numbers or kinds of joint appointments.

V. Instructional Program

A. The following table summarizes the Department’s instructional program in 1967-68:

Course Number	No. of Courses	Hours Per Week	Credit Hours	No. of Courses	Hours Per Week	Credit Hours	No. of Courses	Hours Per Week	Credit Hours
0 – 99	5	14	14	6	17	17	11	31	31
300-399	7	15	22 ½	6	13	19 ½	13	23	42
600-699	11	23	—	12	24	—	23	47	—
Total	23	52	—	24	54	—	47	106	—

Each full-time faculty member except the chairman teaches two courses per semester. The chairman teaches three courses per year. All faculty attend the weekly Department seminar. Most faculty members will attend our dissertation seminar several times a year.
All courses numbered 0-99 are open to all qualified undergraduates, whether they are economics majors or not. All 300-399 numbered courses are open to qualified undergraduates and to graduate students from other departments. A few are not normally taken by Ph.D. candidates in economics. 600-699 numbered courses are open to graduate students in this and other departments.
It is difficult to predict future growth of undergraduate enrollment since, as stated above, we expect it to grow about as fast as the undergraduate student body, which we do not control. However, even in the absence of substantial growth in enrollments, there are several courses that should be added either at the 0-99 or the 300-399 level. These include comparative economic systems, corporation finance, public finance, and economic growth. Some other courses, now given only in alternate years, should be given every year. These include industrial organization, economics of education, and urban economics. Substantial growth in enrollments would require that we offer additional sections of some courses and that we offer some courses every semester rather than once a year.
At the graduate level, our intake of students has been between 10 and 15 for several years, resulting in a body of about 35 students in residence. We have now embarked on a conscious program of increasing the size of our graduate program; in 1967-68, 18 students entered and our student body is 45. Our intake should increase gradually over the coming decade to about 25, with a resulting student body of about 75. Seventy-five is the present graduate enrollment of the next smallest of major graduate programs in economics in other universities. Others are considerably larger. We feel that this growth is necessary to enable us to offer the range of courses now required for proper coverage of our subject matter.
Unless a major expansion of the international relations program is undertaken, we should not have to devote more faculty resources to it, once we have made the appointment we are now seeking in economic development.
Expansion of the faculty from 11 to 18 would permit the addition of 28 semester courses in the Department. The exact nature and level of the courses to added will depend on the interests of faculty members recruited, the interests of undergraduate and graduate students, and developments in the subject matter. However, we expect to continue the policy of devoting roughly half the Department’s teaching resources to courses numbered 0-99 and 300-399, and the other half to 600-level courses.

B. The Department completely reorganized both its undergraduate and graduate curricula in the spring of 1967. This reorganization permitted us to identify clearly the gaps in our program referred to in Section II. We feel that our only pressing curriculum need is now to fill these gaps. Major curriculum reform becomes necessary periodically in a developing discipline, but we have no plans for further reform.

VI. Resources Outside the University

The Department has no formal relationship with organizations outside the University. The Department does, however, benefit from proximity to Washington in several ways. First, proximity to Washington is an attraction to some actual and prospective faculty members. They may obtain data, attend meetings and seminars, and occasionally undertake paid consulting at U.S. Government agencies, international organizations, or private research Institutions. Second, Washington is an attractive source of summer jobs for our graduate students, and a few of our graduates take permanent posts there.

VII. Space requirements

In the spring of 1967 the Department moved into new quarters on the fourth floor of Gilman Hall. These quarters are an important improvement over those previously available to the Department. The new quarters consist of 12 faculty offices, a departmental office, a calculator room, 11 small cubicles for graduate students, a seminar room, and a workroom where recent technical journals are kept.
In terms of space needs, however, the now quarters are already inadequate. We now have 13 faculty posts in the Department, but only 12 offices. In fall 1968 we expect to have all 13 posts filled, and we will have the Hinkley Professor in the Department. We will thus be two offices short. In addition, we recently hired a part-time secretary. The Department office is adequate for only the two secretaries now occupying it and we have to house the new secretary in the calculator room. Within the next year the part-time post will have to be made full time, and the housing problem will be acute.
The ten-year projection for the Department will require major additions to the Department’s space facilities. Faculty offices will have to expand from 12 to 18. The secretarial force will have to expand to at least five, and that will require at least two rooms entirely devoted to secretarial use. The Department now has one seminar room. Virtually all our 300- and 600-level courses are held there and it is in use more than 35 hours per week within a short time it will be necessary to have an additional seminar room. Within ten years it will be important to have a third room that can be used for seminars, conferences and other meetings. Within the next few years we will need a larger calculator room. We already need additional calculators, and this need will grow as the faculty and graduate student body grows. In addition, we will shortly need one or more real time sharing consoles in the Department area.
It is clear that a building to house either the social or behavioral sciences is already overdue at Johns Hopkins. Despite all the building on the campus in the last decade, the social sciences and humanities – as well as statistics and various ancillary facilities are still all housed In Gilman Hall. It is virtually the only building on the campus that is not fully air conditioned. And the removal of the main library has worsened the situation.
The nature of this Department’s space needs would make it difficult, but not impossible, to satisfy them by regrouping the Gilman facilities if some other departments were to be housed in other buildings. A social or behavioral science building – which would include economics ought to be a major part of the 10-year fund raising program.

VIII. Tables and Graphs

A. The following table shows the undergraduate concentrators and majors in Political Economy for 1967-68:

	Concentrators	Majors
Juniors	5	10
Seniors	16	9

This table does not include the BIM students.
In 1967-68 the Department has 18 entering and 27 returning graduate students. We have no post-doctoral students.

B. Faculty

Edwin S. Mills – Professor and Chairman

Age: 39
econometrics, statistics, microeconomics
Research projects: [blank]

Bela Balassa – Professor

Age: 39
International trade, economic theory, comparative systems, economic development
Research projects: [blank]

Carl F. Christ – Professor

Age: 44
econometrics, macroeconomics, money
Research projects: [blank]

G. Heberton Evans, Jr. – Professor

Age: 67
economic history, history of economic thought, private finance
Research projects: [blank]

Herbert E. Klarman – Professor

Age: 51
economics of health, public finance
Research projects: [blank]

Peter Newman – Professor

Age: 39
economic theory, mathematical economics, economic development
Research projects: [blank]

Jürg Niehans – Professor

Age: 48
economic theory, money
Research Projects: [blank]

Frederick T. Sparrow – Associate Professor

Age: [blank]
operations research, microeconomic theory, managerial economics
Research projects: [blank]

William Oakland – Assistant Professor

Age: 28
public finance, money, economic theory
Research projects: [blank]

John Owen – Assistant Professor

Age: 35
labor, economic theory, education
Research Projects: [blank]

William Poole – Assistant Professor

Age: 30
money, macroeconomics, international trade
Research projects: [blank]

H. Louis Stettler, III – Assistant Professor

Age: 29
economic history, economic theory, statistics
Research projects: [blank]

C. As was stated above, the Department should grow from its present size of 12 faculty members to 18 during the next decade. We feel that the current division by rank — about half the faculty are professors — is about right. The following table shows a feasible growth pattern to meet the projected goal:

	1967-68	1968-69	1969-70	1970-71	1971-72	1972-73	1973-74	1974-75	1975-76	1976-77	1977-78
Prof.	6	7	7	7	7	7	8	8	8	8	9
Assoc. Prof.	1	1	2	2	2	2	2	2	2	2	2
Asst. Prof.	4	5	5	5	6	6	6	6	7	7	7
Total	11	13	14	14	15	15	16	16	17	17	18

Our priorities among specialties were indicated in Section II. Beyond that, it is not possible to indicate which appointments should be made in which years and at which levels. Much depends on the availability of particular faculty in whom we are interested and on combinations of zfields in which prospective faculty are interested.

D. The Department is not persuaded that there is an important place for postdoctoral studies in economics during the next decade. Promising graduate students now obtain well-paid posts at universities with graduate programs and with relatively light teaching loads. Our impression is that it would be difficult to entice them to post-doctoral fellowships, and that there is little merit in doing so. Nor are we persuaded that there is a substantial group of young economists at small colleges who could produce significant books and papers if given a year off from heavy teaching duties. The only promising possibility seems to be to find a small number of young foreign scholars who have the Ph.D. or its equivalent, and who could spend a year here with mutual benefit to themselves and to us. The Department is not prepared to urge such a program at this time.

E. The accompanying table shows a projected ton-year budget for the Department of Political Economy. The personnel item includes base salaries and fringe benefits of faculty, secretaries and junior instructors. It assumes that faculty salaries will rise by 7% per year over the next decade. It also takes account of the faculty expansion projected in Section E.
The fellowship budget includes graduate fellowships, tuition and stipends, from whatever source. At present, some is University money, some is U.S. Government money funneled through the University (NDEA, NSF), some is fellowship money obtained by students with Department recommendations, and some is money obtained by students (mostly foreigners) entirely on their own (from foreign sources, U.S. State Department, foundations). This budget assumes that fellowships per student will rise by about 5% per year during the next decade. The table also assumes that the number of entering students will rise from 18 to 25, and the total graduate student body from 45 to 75, over the next decade.
The third line projects a growth of the Department’s incidental and telephone accounts by about 5% per year over the decade.
Excluded from the table are research funds for supplemental faculty salary, research assistants, or computing. No attempt has been made to project funds available from sponsored research or from University sources such as the faculty research grants fund.

	1967-68	1968-69	1969-70	1970-71	1971-72	1972-73
Personnel	233,640	250,000	306,400	340,700	356,500	395,500
Fellowships	159,500	186,000	207,100	229,700	254,100	280,400
Telephones, Supplies	4,000	4,200	4,400	4,600	4,900	5,100
	397,140	440,200	517,900	575,000	615,500	681,000

	1973-74	1974-75	1975-76	1976-77	1977-78
Personnel	453,200	484,900	535,800	573,800	653,400
Fellowships	308,600	339,000	371,600	401,200	432,800
Telephones, Supplies	5,400	5,600	5,900	6,200	6,500
	767,200	829,500	913,300	981,200	1,092,700

Source: Johns Hopkins University. The Eisenhower Library. Ferdinand Hamburger, Jr. Archives. Department of Political Economy [Records], Box 5, Folder “Planning Documents: 1938, 1965, 1967”.

Tags Balassa, Christ, EvansGH, KlarmanHE, MillsES, Newman, Niehans, OaklandW, OwenJ, Poole, Sparrow, Stettler

M.I.T. Suggested Reading Syllabus

M.I.T. Reading list for graduate Monetary Economics I. Modigliani and Poole, 1977

Post author By Irwin Collier
Post date 2020-09-02

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.

_____________________

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.

_____________________

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.

Tags Bernanke, Modigliani, Poole

Johns Hopkins Suggested Reading Syllabus

Johns Hopkins. Reading List for Monetary Economics, William Poole, 1964

Post author By Irwin Collier
Post date 2020-03-15

Typically one encounters the work of senior scholars without having much of a clue about what they might have been like when they were young. While there is the occasional Peter Pan among us who have lived long lives as Wunderkinder (e.g. Paul Samuelson), the overwhelming majority of academic economists have developed, some even in a positive sense, so it is useful to have material from different points in their individual life cycles. This post provides a small window into the academic life of a young economist who was to go on to become a member of Ronald Reagan’s Council of Economic Advisers and the eleventh president of the Federal Reserve Bank of St. Louis, Professor William Poole. The reading list for monetary theory transcribed below comes from his second year at the Johns Hopkins University.

______________________

William Poole’s Fed Biography

William Poole became the eleventh president of the Federal Reserve Bank of St. Louis on March 23, 1998, and retired March 31, 2008.

Poole was born in Wilmington, Delaware. He received a bachelor’s degree from Swarthmore College in 1959 and a master’s degree and a doctorate in economics from the University of Chicago in 1963 and 1966, respectively. Before joining the St. Louis Fed, Poole was Herbert H. Goldberger Professor of Economics at Brown University. He served on the Brown faculty from 1974 to 1998 and the faculty of Johns Hopkins University from 1963 to 1969. Between these two university positions, he was senior economist at the Board of Governors of the Federal Reserve System. He was also a member of the Council of Economic Advisers in the first Reagan administration from 1982 to 1985.

Poole has published numerous papers in professional journals and engaged in a wide range of professional activities. He has published two books: Money and the Economy: A Monetarist View in 1978 and Principles of Economics in 1991 (coauthored with J. Vernon Henderson). During his ten years at the St. Louis Fed, he delivered over 150 speeches on a wide variety of economic and finance topics.

In 1980 and 1981, Poole was a visiting economist at the Reserve Bank of Australia; in 1991, he was the Bank Mees and Hope Visiting Professor of Economics at Erasmus University in Rotterdam. He has served on various advisory boards of the Federal Reserve Banks of Boston and New York and the Congressional Budget Office. He is a senior fellow at the Cato Institute, distinguished scholar in residence at the University of Delaware, senior economic adviser to Merk Investments, and a special adviser to Market News International.

Swarthmore honored Poole with a doctor of laws degree in 1989. He was inducted into the Johns Hopkins Society of Scholars in 2005 and presented with the Adam Smith Award by the National Association for Business Economics in 2006. In 2007, the Global Interdependence Center presented him its Frederick Heldring Award.

Source: William Poole page at the Federal Reserve History Website.

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THE JOHNS HOPKINS UNIVERSITY
Monetary Theory—361
Fall 1964

W. Poole

READING LIST

TEXT: A.G. Hart and P.B. Kenen, Money, Debt and Economic Activity (3^rd. ed.)

I The Nature of Money

Hart & Kenen, “Introduction”
D.H. Robertson, Money, Ch. 1, pp. 41-50

II The Supply of Money

Hart & Kenen, Chs. 1-7
E.S. Shaw, Money, Income and Monetary Policy, Chs. 2, 3, 6, 10
A. Hansen, Monetary Theory and Fiscal Policy, Ch. 2
B. Kragh, ”Two Liquidity Functions and the Rate of Interest,” R.E. Stud. 17 (2) (1949-50) pp. 98-106
M. Friedman, “Commodity-Reserve Currency,” JPE 59 (June, 1951) pp. 203-32; reprinted in M. Friedman, Essays in Positive Economics, pp. 204-50

III Classical Quantity Theory

Hart & Kenen, Ch. 11
I. Fisher, The Purchasing Power of Money, Chs. 1-5, 8
A.C. Pigou, “The Value of Money,” QJE 32 (1917-18) pp. 38-65; reprinted in RMT, pp. 162-83
A. Hansen, Ch. 3

IV The Demand for Money and the Rate of Interest

Hart & Kenen, Ch. 14
J.M. Keynes, The General Theory of Employment, Interest and Money, Chs. 13-15, 17
A. Hansen, Ch. 4
W.J. Baumol, ”The Transactions Demand for Cash: An Inventory Theoretic Approach,” QJE 66 (Nov. 1952), pp. 545-56
J. Tobin, “The Interest-Elasticity of Transactions Demand for Cash,” R.E.Stat. 38 (Aug. 1956), pp. 241-47
_________, “Liquidity Preference as Behavior Towards Risk,” R.E.Stud. 25 (2) (Feb. 1958), pp. 65-86
M. Friedman, “The Quantity Theory of Money—A Restatement,” in M. Friedman (ed.) Studies in the Quantity Theory of Money

V Money and Economic Activity

Hart & Kenen, Chs. 12, 13
J.M. Keynes, Chs. 7-12, 18
M. Bailey, National Income and the Price Level, Chs. 1,2
A. Hansen, Ch. 5
J.R. Hicks, “Mr. Keynes and the ‘Classics’: A Suggested Interpretation,” Econometrica 5 (April 1937), pp. 147-59

Source: Johns Hopkins University. The Ferdinand Hamburger, Jr. Archives. Department of Political Economy Series 6, Box 1, Folder “Course Outlines and Reading Lists, ca. 1950, 1963-68”.

Image Source: William Poole at the Federal Reserve Centennial, 2014.

Tags Poole

Economists Harvard Lecture Notes

Harvard. Tobin’s notes to lecture by Alvin Hansen on Keynes’ General Theory, May 1938

Post author By Irwin Collier
Post date 2019-09-27

The following notes were taken by James Tobin at the end of his junior year at Harvard. The notes for this lecture by Alvin H. Hansen on Keynes’ General Theory were “filed” as loose-leaf pages inserted into a bound volume of Tobin’s handwritten course notes for Economics 41 (Money, Banking, and Commercial Crises, taught by John H. Williams and Seymour Harris). Hansen’s lecture might have been a guest lecture for that course since only a recitation section taught by Kenyon Edward Poole was included in the notes for that date.

Also on that date in history at Harvard: Gunnar Myrdal held the second lecture in his four-lecture Godkin public lecture series “The Population Problem and Social Security”.

__________________

Lecture
5/4/38
Prof. Alvin H. Hansen of Garver & Hansen
Littauer Professor of Political Economy

Keynes’ General Theory.

Not mainly concerned with trade cycle. Ch[apter] on trade cycle not very original. Cycle consists in fluctuation of rate of investment-purchase of capital-goods. Keynes holds that fluctuations in rate of invest[ment] due to fluctuations in the rate of prospective profits, in the marg[inal] efficiency of capital. Keynes emphasizes the rôle of expectations—psychology. Quick shift from prosperity to depression due to violent shifts in expectation from optimism to pessimism.

Mainly concerned with larger problem of full empl[oyment] of labor and the other factors of production. Could still have trade cycle but its booms would hit full employment. But also conceivable is a society in which ceiling of fluctuations is below full empl[oyment]—permanent under-employment. This long-run under-empl[oyment] Keynes mainly concerned with. Modern societies tend to be in a situation of chronic under-employment. He accuses classicals of working on assumption that society has long-run tendency to full empl[oyment]. Classical writers were concerned with pricing system and returns to different factors, and how much labor, etc., was used. R[ate] of int[erest] for example determined amount of saving cped [compared?] to consumption out of given income. This according to K[eynes] only goes with full empl[oyment] assumption. Rise in consumption in condition of under-empl[oyment] will lead to rise in investment as well. These are not alternatives until there is full empl[oyment]. This well realized by bus[isness] cycle theorists. Keynes applies it to long-run analysis.

What determines the volume of employment?

1) Rate of interest
2) Marg[inal] efficiency of capital. (Prospective rate of profit anticipated by bus[iness] man.)
3) Propensity to consume.

Nothing new about introducing rate of int[erest] as a determinant. Wicksell 1898 set forth determinants of expansion as prospective rate of profit on one side and r[ate] of int[erest] on the other side. Keynes adds the propensity to consume. dC/dY >0, <1, decreases. Rich societies have tendency to fail to maintain level of income once achieved. A society which consumes all of its income would have no difficulty in maintaining its level, because no deficiency in income-spending from incomes pd [paid] out to factors. If some part is not spent on consumers’ goods—just saved without a purchase of capital-goods – those who save are not actual investors-entrepreneurs—and there is not an equal amount of new investment, there is a tendency for incomes to fall. If propensity to consume is low, other determinants of employment must be very strong—high prospective rate of profit, low r[ate] of int[erest]—in order to balance saving.

“Classical” relation of r[ate] of int[erest] to saving. Later classical writers qualified argument: if r[ate] of int[erest] is very high, more saving; if low, less. But in between, there are the fixed-income savers. Keynes: determinant is level of incomes. Wouldn’t say no relation of saving to r[ate] of int[erest]. Given r[ate] of int[erest], determinant is level of incomes. There is for K[eynes] then no minimum r[ate] of int[erest], such as Cassel found: if int[erest] falls there because of shortness of human life people will say int[erest] is so low that not much income from it. Hence they will consume capital. At this p[oin]t tendency for saving to decrease, & consumption [to] increase. For K[eynes] there is another minimum point, below which there is not decrease of saving but an increase of hoarding. K[eynes] distinguishes mkt [market] & pure rates of int[erest]. Special risk in buying long-term commitment—risk is that r[ate] of int[erest] will rise a little bit in future, price of bond will drop so as to wipe out all int[erest] gain on it. Hence there is pt[point] where we won’t bother to buy securities but will hold cash. R[ate] of int[erest]not driven down below point of consump[tion] ncrease. What people will do is hold savings in liquid forms.

In rich community, marg[inal] efficiency of capital low; propensity to consume low; but rate of int[erest] can’t keep falling because of liquidity-preference. Hence there is not adequate volume of new invest[ment] to maintain full employment. R[ate] of int[erest] doesn’t drop to point where people stop saving & consume more, & rectify the difficulty; but is held up by liquidity preference.

Emphasizes largely r[ate] of int[erest]; Spiethoff thinks important thing in expansion is marg[ignal] efficiency of capital, which K[eynes] largely takes for granted. Spiethoff’s factors influencing prospective rate of profit on new invest[ment]: expanding market, increasing population, inventions & giant industries. All these associated with a young & growing capitalism, as in 19^th.—unique century, conquering the world and revolutionizing the industrial technique and expanding population. Now decline in population, and no new mkts [markets]. K[eynes] assumes this exploitation of opportunities & emphasizes the monetary rate of int[erest], not as Spiethoff on non-monetary influences on marg[inal] efficiency. Risk & uncertainty of modern world decrease the will to invest—and perhaps also the tendency to save w[oul]d be greater. Failure of invest[ment] outlet.

K[eynes]’s solutions:

1) Artificially create a low rate of interest.
2) Stimulate consump[tion] by redistribution of income.
3) Enlarge volume of public investment.

[Qualifications]

1) How far will stimulate invest[ment] doubtful.
2) Effects of taxation for this purpose may hurt private invest[ment]
3) Public invest[ment] may be offset by private invest[ment] decline.

Economic policies are choice among evils.

Source: Yale University Archives. Papers of James Tobin. Box 6, Loose pages in bound lecture notes for Economics 41 taken by James Tobin during the 1937-38 academic year at Harvard University.

Image Source: James Tobin senior year portrait in Harvard Class Album, 1939.

Tags Hansen, Harris, Myrdal, Poole, Tobin, WilliamsJH

TEN-YEAR PROJECTS AND OUTLOOK FOR DEPARTMENT OF POLITICAL ECONOMY [Draft, 1967]