Monetary economics is a branch of economics that historically prefigured and remains integrally linked to macroeconomicsIt provides a framework for analyzing money in its functions as a medium of exchange, store of value, and unit of account. It considers how money, for example fiat currency, can gain acceptance purely because of its convenience as a public good It examines the effects of monetary systems, including regulation of money and associated financial and international aspects.Modern analysis has attempted to provide a more micro-based formulation of the demand for money and to distinguish valid nominal and real monetary relationships for micro or macro uses, including their influence on the aggregate demand for output It has also derived and tested the implications of money as a substitute for other assets and as based on explicit frictions.
Research areas have included:
empirical measurement of the money supply, whether narrowly, broadly-, or index-aggregated, in relation to economic activity
debt-deflation and balance-sheet theories, which hypothesize that a change in net worth of borrowers amplifies business fluctuations by changing credit in the same directionthe relation of financial and macroeconomic stability and its implications.
the importance and stability of the relation between the money supply and interest rates, the price level, and nominal and real output of an economymonetary impacts on interest rates and the term structure of interest rates
transmission mechanisms of monetary policy as to the macroeconomythe monetary/fiscal policy relationship to macroeconomic stability
tests of rational expectations as to changes in output from monetary policy
possible advantages of following a monetary-policy rule to avoid inefficiencies of time inconsistency from discretionary policy
"anything that central bankers should be interested in"
Research areas have included:
empirical measurement of the money supply, whether narrowly, broadly-, or index-aggregated, in relation to economic activity
debt-deflation and balance-sheet theories, which hypothesize that a change in net worth of borrowers amplifies business fluctuations by changing credit in the same directionthe relation of financial and macroeconomic stability and its implications.
the importance and stability of the relation between the money supply and interest rates, the price level, and nominal and real output of an economymonetary impacts on interest rates and the term structure of interest rates
transmission mechanisms of monetary policy as to the macroeconomythe monetary/fiscal policy relationship to macroeconomic stability
tests of rational expectations as to changes in output from monetary policy
possible advantages of following a monetary-policy rule to avoid inefficiencies of time inconsistency from discretionary policy
"anything that central bankers should be interested in"
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