Creator: Smith, Bruce D., d. 2002. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 234 Abstract:
Current approaches to monetary theory and policy owe much to the "quantity theory of money." However, recent theoretical developments suggest that the manner in which money is introduced is more important, even for price level movements, than the quantity of money. Colonial American experience provides a laboratory for discriminating between these views. It is shown here that the nature of backing, rather than the quantity of money, determined its value. Large secular inflations were ended by changing the nature of backing despite the continuance of large note issues (and despite the absence of a metallic standard). Extremely large note issues and note withdrawals are shown not to have produced inflation (currency depreciation) or deflation (currency appreciation).
Stichwort: Quantity theory, Colonial America, Fiat money, and Currency Fach: E42 - Money and interest rates - Monetary systems ; Standards ; Regimes ; Government and the monetary system ; Payment systems, E52 - Monetary policy, central banking, and the supply of money and credit - Monetary policy, and N11 - Macroeconomics and monetary economics ; Growth and fluctuations - United States ; Canada : Pre-1913
Creator: Backus, David. and Kehoe, Patrick J. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 318 Abstract:
These notes are intended as a do-it-yourself course in economic growth along lines suggested by Lucas ("On the Mechanics of Economic Development"). We examine in turn the neoclassical growth model; theories of endogenous growth, including learning-by-doing, increasing returns to scale, and externalities; and dynamic comparative advantage in trade. Salient features of growing economies and microeconomic evidence on production processes are used to evaluate alternatives. Exercises supplement the text.
Stichwort: Returns to scale, Neoclassical growth, Learning-by-doing, Dynamic comparative advantage, and Technical change Fach: O42 - Economic growth and aggregate productivity - Monetary growth models, F11 - Trade - Neoclassical models of trade, and O33 - Technological change ; Research and development - Technological change : Choices and consequences ; Diffusion processes
Creator: Smith, Bruce D., d. 2002. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 245 Abstract:
Recent developments in monetary economics stress the nature of monetary injections, emphasizing that these have implications for the relationship between money and prices. In constrast, traditional approaches posit stable money demand functions that are independent of how money is injected. The former approach implies that certain proportionality relations between money and prices need not obtain. This permits the two approaches to be empirically distinguished, but only if an appropriate "experiment" is conducted. The colonial period is one such experiment. Colonial evidence suggests that the nature of injections is crucial to the effect on prices of changes in the money supply.
Stichwort: Value of money, Monetary injections, Sargent-Wallace theory of money, and Quantity theory of money Fach: E51 - Monetary policy, central banking, and the supply of money and credit - Money supply ; Credit ; Money multipliers and N11 - Macroeconomics and monetary economics ; Growth and fluctuations - United States ; Canada : Pre-1913
Creator: Lin, Lizbie Gee-Sun. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Beschreibung:
Simultaneously published as part of the Ninth District Economic Information Series.
Stichwort: Students, Community colleges, Technical colleges, and Colleges and universities Fach: I22 - Education and research institutions - Educational finance, H52 - National government expenditures and related policies - Government expenditures and education, and R11 - General regional economics - Regional economic activity : Growth, development, and changes
Creator: Greenwood, Jeremy, 1953- and Jovanovic, Boyan, 1951- Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 446 Abstract:
A paradigm is presented where both the extent of financial intermediation and the rate of economic growth are endogenously determined. Financial intermediation promotes growth because it allows a higher rate of return to be earned on capital, and growth in turn provides the means to implement costly financial structures. Thus, financial intermediation and economic growth are inextricably linked in accord with the Goldsmith-McKinnon-Shaw view on economic development. The model also generates a development cycle reminiscent of the Kuznets hypothesis. In particular, in the transition from a primitive slow-growing economy to a developed fast-growing one, a nation passes through a stage where the distribution of wealth across the rich and poor widens.
Stichwort: Growth rate, Financial intermediation, Income gap, Rate of return, Income distribution, and Kuznets curve Fach: O11 - Economic development - Macroeconomic analyses of economic development and G00 - Financial Economics - General - General
Creator: Williamson, Stephen D. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 405 Abstract:
A model is constructed where banks provide access to a communication technology which facilitates trade. Bank liabilities may coexist with alternative means of payment in equilibrium, and there exist regions of the parameter space where banking dominates the payments system and where physical exchange media dominate. The model is consistent with some observations concerning the role of the banking system in economic development, and with characteristics of banking crises. In particular, in early stages of economic development: 1) rapid output growth is accompanied by an increasing share of banking in transactions activity and 2) there are recurrent banking "panics" where reductions in measured aggregate output coincide with increases in the use of alternative means of payment relative to bank liabilities. In later stages of development, growth slackens off, the share of banking in the payments system stabilizes and the economy is less likely to be subject to banking panics.
Prepared for a conference on "Models of Money and Intermediation," University of Western Ontario, October 1988. A preliminary version was presented at the NBER Summer Institute, July 1988.
Stichwort: Communication cost, Financial panic, Banks, Communication technology, and Banking panics Fach: O33 - Technological change ; Research and development - Technological change : Choices and consequences ; Diffusion processes and G21 - Financial institutions and services - Banks ; Other depository institutions ; Micro finance institutions ; Mortgages
Creator: Boyd, John H. and Smith, Bruce D., d. 2002. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 522 Abstract:
We consider a two country growth model with international capital markets. These markets fund capital investment in both countries, and operate subject to a costly state verification (CSV) problem. Investors in each country require some external finance, but also provide internal finance, which mitigates the CSV problem. When two identical (except for their initial capital stocks) economies are closed, they necessarily converge monotonically to the same steady state output level. Unrestricted international financial trade precludes otherwise identical economies from converging, and poor countries are necessarily net lenders to rich countries. Oscillation in real activity and international capital flows can occur.
Stichwort: CSV, International lending, Capital investment, Credit rationing, International capital markets, Credit, Costly state verification, Closed economy, and Open economy Fach: O16 - Economic development - Financial markets ; Saving and capital investment ; Corporate finance and governance and F34 - International finance - International lending and debt problems
Creator: Backus, David., Kehoe, Patrick J., and Kehoe, Timothy Jerome, 1953- Series: Modeling North American economic integration Abstract:
We look for the scale effects on growth predicted by some theories of trade and growth based on dynamic returns to scale at the national or industry level. The increasing returns can arise from learning by doing, investment in human capital, research and development, or development of new products. We find some evidence of a relation between growth rates and the measures of scale implied by the learning by doing theory, especially total manufacturing. With respect to human capital, there is some evidence of a relation between growth rates and per capita measures of inputs into the human capital accumulation process, but little evidence of a relation with the scale of inputs. There is also little evidence that growth rates are related to measures of inputs into R&D. We find, however, that growth rates are related to measures of intra-industry trade, particularly when we control for scale of industry.
Stichwort: Human capital, Learning by doing, International trade, Research and development, Specialization indexes, Increasing returns to scale, Intra-industry trade, and External effects Fach: F43 - Economic Growth of Open Economies and O41 - One, Two, and Multisector Growth Models