List of Contributors.
1 Issues in Monetary Policy (Kent Matthews and Philip
Booth).
1.1 Introduction.
1.2 The monetarist counter-revolution.
1.3 Practice ahead of theory.
1.4 The dangers of practice without theory.
References.
2 Monetary Policy: Practice Ahead of Theory (Mervyn
King).
2.1 Introduction.
2.2 What can monetary policy do?
2.3 Learning and its implication for monetary policy.
2.4 Inflation targeting as a framework which accommodates
learning.
2.5 Conclusion.
References.
3 Are the Structure and Responsibilities of the Bank of
England Optimal and If Not, Does It Matter? (David B.
Smith).
3.1 Introduction.
3.2 Current arrangements.
3.3 The conventional theoretical macro model (CTMM).
3.4 How the Bank?s main macro model constrained the
monetary debate.
3.5 The new Bank of England quarterly model.
3.6 The monetarist case for a big central bank.
3.7 Lessons from Britain?s monetary history.
3.8 Main conclusions.
References 37
4 Why Price-Level Targeting is better than Inflation
Targeting (Andrew Lilico).
4.1 Introduction.
4.2 How do inflation targeting and price-level targeting
differ?
4.3 What is there to gain from long-term price stability?
4.4 Inflation volatility is not same thing as inflation
uncertainty.
4.5 Price-level targeting generates its own credibility.
4.6 Price-level targeting is self-regulating.
4.7 Price-level targeting offers escape from a low-employment
equilibrium.
4.8 The ?costs? of price-level targeting have
corresponding benefits.
4.9 Price-level targeting vs. average inflation targeting.
4.10 The history of price-level targeting.
4.11 Conclusion.
References.
5 A Price Targeting Regime Compared to a Non Price Targeting
Regime. Is Price Stability a Good Idea? (Keith
Pilbeam).
5.1 Introduction.
5.2 The ultimate objective of economic policy.
5.3 Modeling economic shocks.
5.4 The model.
5.5 Determining Equilibrium.
5.6 A money demand shock.
5.7 Aggregate demand shock.
5.8 An aggregate supply shock.
5.9 The search for an indicator.
5.10 Conclusions.
References.
6 Optimal Monetary Policy with Endogenous Contracts: Is there
a Case for Price-Level Targeting and Money Supply Control?
(Patrick Minford).
6.1 Introduction.
6.2 Considerations in designing monetary policy
arrangements.
6.3 Monetary policy: Is inflation targeting the best we can
do?
6.4 Interest rate control ? what does it do?
6.5 Money supply targeting and feedback rules ? a
stochastic simulation analysis.
6.6 Conclusions.
Annex: The representative agent model (RAM).
References.
7 Forecasting Inflation: The Inflation ?Fan
Charts? (Kevin Dowd).
7.1 Inflation forecasting.
7.2 The inflation fan charts.
7.3 The Bank?s forecast inflation density function.
7.4 Evaluating the Bank?s inflation forecasts.
7.5 Conclusions.
Annex: The two-piece normal density function.
References.
8 Asset Prices, Financial Stability, and the Role of the
Central Bank (Forrest Capie and Geoffrey Wood).
8.1 Introduction.
8.2 What is price stability?
8.3 Financial stability.
8.4 The lender of last resort.
8.5 Do asset prices matter?
8.6 Should institutions be propped up?
8.7 Financial benefits of monetary stability.
8.8 Conclusions.
References.
9 Money, Asset Prices and the Boom-Bust Cycles in the UK: An
Analysis of the Transmission Mechanism from Money to
Macro-Economic
Outcomes (Tim Congdon).
9.1 Introduction.
9.2 Traditional accounts of the transmission mechanism.
9.3 Asset prices in the traditional accounts.
9.4 The ownership of capital assets in the UK.
9.5 Asset prices and economic activity.
9.6 Conclusion: Money and asset prices in the transmission
mechanism.
Annex: Econometric analysis of one type of real balance
effect.
References.
10 Money, Bubbles and Crashes: Should a Central Bank Target
Asset Prices? (Gordon T. Pepper with Michael J.
Oliver).
10.1 Introduction.
Part A: The monetary theory of bubbles and crashes.
10.2 Types of traders in securities.
10.3 Extrapolative expectations.
10.4 Debt-deflation.
Part B: Should a central bank target asset prices?
10.5 Preventing financial Bubbles.
10.6 Conclusions ? an answer and a question.
Annex: Disequilibrium.
References.
11 Monetary Policy and the Bank of Japan (John
Greenwood).
11.1 Introduction.
11.2 Japan?s golden era in monetary policy,
1975?85.
11.3 How monetary policy went off the rails, 1985?89.
11.4 The bursting of the bubble, 1989?91.
11.5 Assessment of policy responses.
11.6 Monetary policy ? deliberate yen depreciation.
11.7 Monetary policy ? government borrowing from the
banks.
11.8 Restructuring policies.
11.9 Conclusion.
References.
Appendix 1: Unemployment versus Inflation? An Evaluation of
the Phillips Curve (Milton Friedman).
Appendix 2: The Counter-Revolution in Monetary Theory
(Milton Friedman).
Index.
Kent Matthews is the Julian Hodge Professor of Banking and
Finance at Cardiff University. He trained at the London School
of
Economics, Birkbeck College and Liverpool University and has
held
previous academic positions at Liverpool University, Liverpool
Business School. He has held visiting posts at the Catholic
University of Leuven Belgium, Humbolt University, Berlin and
University ofWestern Ontario, Canada as well as professional
posts
at the National Institute of Economic & Social Research, the
Bank of England and Lombard Street Research Ltd.
Philip Booth BA, PhD, FIA, FSS is Editorial and Programme
Director at the Institute of Economic Affairs and Professor of
Insurance and Risk Management at Cass Business School, City
University. He has previously worked as a special advisor on
financial stability issues for the Bank of England. Philip Booth
is
editor of the journal Economic Affairs and associate editor
of the British Actuarial Journal. He is a Fellow of the
Institute of Actuaries and of the Royal Statistical Society.
Amongst previous books he has written are Investment
Mathematics (Wiley), Modern Actuarial Theory and
Practice (CRC/Chapman Hall) and The Way Out of the Pensions
Quagmire (Institute of Economic Affairs). He teaches,
researches and writes in the areas of finance, investment and
social insurance.
"...(people can) gain so much more from this book than the review can do justice to..." (Credit Control, June 2006)
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