Monetary economics and policy : a foundation for modern currency systems / Pierpaolo Benigno.

Format:

Book

Author/Creator:

Benigno, Pierpaolo, author.

Language:

English

Subjects (All):

Banks and banking.

Macroeconomics.

Monetary policy.

Physical Description:

1 online resource (0 pages)

Edition:

First edition.

Place of Publication:

Princeton, New Jersey : Princeton University Press, [2025]

Summary:

A unified framework for understanding monetary policy, including recent unprecedented interventions by central banks Over the past two decades, monetary policy has been deployed in unprecedented ways, as central banks attempted to mitigate the adverse consequences of the 2007-2008 financial crisis, the COVID-19 global lockdown, and recent inflationary surges. In Monetary Economics and Policy, Pierpaolo Benigno offers a new way to understand the potency and effectiveness of monetary policy, presenting a unified modeling framework to analyze policy challenges posed by both paper and digital currency systems. He investigates current theoretical and policy controversies, drawing connections with historical themes in monetary economics. Benigno examines how central banks control the value of their currency amid competition from cryptocurrencies and private money-like securities; discusses the desirability of inflation targeting for macroeconomic stabilization; and explores theoretical grounds for the unconventional monetary policies seen in the recent period of zero nominal interest rates, including forward guidance, quantitative and credit easing, and helicopter money. He accompanies his analysis with an innovative visual representation of the New Keynesian model and inflation-targeting policies. Benigno's novel framework also allows the study of monetary policy normalization through quantitative tightening toward what has become the "new normal." He discusses the optimal provision of liquidity and the different roles of the government and financial intermediaries. Finally, he recounts historical controversies regarding the inflation-unemployment trade-off to understand the 2020s inflationary surge and delves into the causes and dynamics of hyperinflations, tracing them to the subtle, ambiguous linkages between monetary and fiscal policy and weak balance-sheet conditions for the central bank.

Contents:

Part I: Currency and Money

Introduction

1. The Value of Currency

1.1. Introduction

1.2. Outline of the Results

1.3. Model

1.3.1. Consumers

1.3.2. Government

1.3.3. Equilibrium

1.4. Determining the Value of the Currency

1.4.1. The Fiscal Theory of the Price Level

1.4.2. Central Bank Theory of the Price Level

1.5. Holding Gold

1.6. References

2. Cash as a Medium of Exchange

2.1. Introduction

2.2. Outline of the Results

2.3. Model

2.3.1. Consumers

2.3.2. Government

2.3.3. Equilibrium

2.3.4. Seigniorage

2.4. Price Determination through the Interest Rate Policy

2.5. Price Determination through Money Aggregates

2.6. The Gold Standard

2.7. Optimal Policy

2.8. Cryptocurrency Competition

2.8.1. Only Government Money Is Used

2.8.2. Both Types of Money Are Used

2.8.3. Only Private Money Is Used

2.8.4. Launching a Fully Backed Cryptocurrency

2.9. References

3. Central Bank Digital Currency

3.1. Introduction

3.2. Outline of the Results

3.3. Model

3.3.1. Consumers

3.3.2. Government

3.3.3. Equilibrium

3.4. Price Determination

3.5. Optimal Liquidity Policy

3.6. References

4. Private Money

4.1. Introduction

4.2. Outline of the Results

4.3. Model

4.3.1. Consumers

4.3.2. Government

4.3.3. Intermediaries

4.3.4. Equilibrium

4.4. The Supply of Public and Private Liquidity

4.5. Dominant Currency

4.6. References

Part II: Stabilization Policies

5. The Benchmark New Keynesian Model

5.1. Introduction

5.2. Outline of the Results

5.3. Model

5.3.1. Households

5.3.2. Firms

5.3.3. Government

5.4. Equilibrium with Flexible Prices

5.5. Price Rigidities

5.5.1. Equilibrium with Price Rigidities

5.5.2. Log-linear Approximation

5.6. References.

6. An AS-AD Graphical Analysis

6.1. Introduction

6.2. Outline of the Results

6.3. Productivity Shock

6.3.1. A Temporary Productivity Shock

6.3.2. A Permanent Productivity Shock

6.3.3. Optimism or Pessimism on Future Productivity

6.4. Markup Shock

6.5. Public Spending Shock

6.6. Preference Shock

6.7. Disanchoring of Price Expectations

6.8. References

7. Inflation Targeting as an Optimal Policy

7.1. Introduction

7.2. Outline of the Results

7.3. Optimal Policy under Commitment

7.4. Optimal Policy under Discretion

7.5. Interest Rate Rules

7.6. Optimal Inflation Target

7.7. References

8. NK Model with a Banking Sector

8.1. Introduction

8.2. Outline of the Results

8.3. Model

8.3.1. BankingModel

8.3.2. Households

8.3.3. Firms

8.3.4. Government

8.4. Equilibrium

8.5. Log-linear Approximation

8.6. Optimal Policy

8.7. References

Part III: Crisis Models

9. Liquidity Trap

9.1. Introduction

9.2. Outline of the Results

9.3. Helicopter Money

9.3.1. Helicopter Money Coordinated by Monetary and Fiscal Policy

9.3.2. Helicopter Money by Central Bank Only

9.4. Unconventional Monetary Policy

9.4.1. Irrelevance of Unconventional Open Market Operations

9.4.2. Relevance of Unconventional Open Market Operations

9.5. Forward Guidance

9.6. Managing the Central Bank's Reserves

9.7. Other Channels for Unconventional Monetary Policies

9.8. References

10. Deleveraging and Credit Crunch

10.1. Introduction

10.2. Outline of the Results

10.3. Debt Deleveraging

10.4. The Credit Crunch

10.5. A General Framework

10.6. References

11. Shortage of "Safe Assets

11.1 Introduction

11.2. Outline of the Results

11.3. Model

11.3.1. Consumers

11.3.2. Financial Intermediaries

11.3.3. Government.

11.4. Equilibrium with the Government Satiating Liquidity

11.5. Equilibrium with No Frictions in the Supply of Private Safe Assets

11.6. Equilibrium with Frictions in the Supply of Private Safe Assets

11.7. Government Intervention

11.7.1. Government Policy with a Limit on Taxes

11.7.2. Regulation of Intermediaries' Investments

11.7.3. General Discussion

11.8. References

Part IV: Inflation

12. The Inflation-Unemployment Trade-Off

12.1. Introduction

12.2. Outline of the Results

12.3. Natural Rate of Unemployment

12.4. Keynesian Unemployment

12.5. Short-Run Non-neutralities

12.6. Persistent Monetary Non-neutralities

12.7. An L-Shaped New Keynesian Phillips Curve

12.8. References

13. Hyperinflation

13.1. Introduction

13.2. Outline of Results

13.3. Deficit Financing and Inflation

13.3.1. Money-Financed Real Fiscal Deficit

13.3.2. Money-Financed Nominal Fiscal Deficit

13.3.3. . . . with Interest Rate Policies

13.4. Some Unpleasant Monetarist Arithmetic

13.4.1. Tight Money Paradox

13.5. Central Bank's Balance Sheet and Inflation

13.6. References

Part V: Conclusion

The Future of Monetary Policy

Part VI: Appendix

Appendix to Chapter 1

A Derivation of Equation (1.5)

Appendix to Chapter 2

B Derivation of Equation (2.4)

Appendix to Chapter 3

C Derivation of Equation (3.4)

Appendix to Chapter 5

D Derivation of Equations (5.3) and (5.4)

E Derivation of the Log-linear Approximations of Section 5.5.2 of Chapter 5

Appendix to Chapter 7

F Derivations of the Loss Function (7.1)

G Conditions for Determinacy

Appendix to Chapter 8

H Derivations of Approximations (8.22) and (8.23)

I Derivations of the Loss Function (8.27)

Bibliography

Index.

Notes:

Electronic book.

Includes bibliographical references and index.

Description based on publisher supplied metadata and other sources.

Description based on print version record.

ISBN:

9780691265322

0691265321

OCLC:

1483147030