Towards a New Paradigm in Monetary EconomicsTowards a New Paradigm for Monetary Economics presents a pioneer treatment of critical topics in monetary economics. Unlike the prevailing monetary theory, this book focuses not on the role of money in facilitating transactions, but on the role of credit in facilitating economic activities more broadly. The 'new paradigm' emphasizes the demand and supply of loanable funds, which in turn requires the understanding of the imperfections of information and the role of banks. One enlightening view is that credit is quite different from other commodities in the sense that the former is based on information and default risk. The book consists of two parts. The first part develops a basic model of credit based on banks' portfolio choices. The second part is dedicated to the policy implications, among which are the liberalization of financial markets, the East Asian Crisis, the 1991 US recession and the subsequent recovery. |
Contents
The principles of the new paradigm | 1 |
Reflections on the current state of monetary economics | 7 |
How finance differs | 26 |
The ideal banking system | 43 |
Restricted banking or the banking system of today | 90 |
Market equilibrium | 104 |
From the corn economy to the monetary economy | 117 |
Towards a general equilibrium theory of credit | 137 |
Financial market liberalization | 234 |
Restructuring the banking sector | 239 |
Regional downturns and development and monetary policy | 251 |
The East Asia crisis | 261 |
The 1991 US recession and the recovery | 276 |
The new paradigm and the new economy | 284 |
Concluding remarks | 293 |
| 303 | |
Other editions - View all
Towards a New Paradigm in Monetary Economics Joseph Stiglitz,Bruce Greenwald No preview available - 2003 |
Common terms and phrases
adverse selection aggregate demand amount analysis assets bank's banking system bankruptcy costs borrowers capital adequacy requirements capital adequacy standards capital market chapter constraints countries credit rationing crisis decrease demand and supply deposit rates depositors downturn East Asia economic activity effectiveness of monetary equilibrium equity exchange rate expected return Figure firms franchise value government bonds Greenwald higher interest rates hold impact imperfect incentives increase in interest indifference curves inflation interest rate charged investment lead lenders lending activity lending rate liquidity trap loan portfolio long-term bonds lower interest rates macro-economic marginal mean-variance monetary policy nominal interest rates opportunity locus opportunity set probability of default problems Raffaele Mattioli real interest rates recession reduced regulation reserve requirements restricted banking restructuring result risk averse risk neutral risk taking risky role shift short-term Stiglitz substitution effect supply of credit T-bill rate theory tion variable wealth effect worth
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