The Theory of Monetary Institutions

The Theory of Monetary Institutions covers free banking monetary thought and a theoretical account of the evolution of monetary institutions.

“" The Theory of Monetary Institutions is a thorough and insightful treatment of the emergence and evolution of money and banking regimes. Professor White's brilliant exposition of alternative regimes is innovative and sheds a great deal of light upon the crucial features of contemporary money and banking institutions. This tour-de-force is a 'must-read'." Steve H. Hanke, The John Hopkins University "Larry White's The Theory of Monetary Institutions provides a very clear, extremely readable and up-to-date overview of monetary theory. White provides a uniquely insightful perspective into a difficult and controversial area, and his arguments and analysis are unbeatable. All monetary economists should read it." Kevin Dowd, University of Sheffield "White has written an academically rigorous text covering the theory of money, banking, and monetary policy. The text stands out from others in the way it describes the evolution of economists' thinking about monetary institutions. White excels in combining the historic with the contemporary, the abstract with the tangible, and the theoretical with the practical. The chapters on alternative monetary regimes will no doubt challenge many widely-held views about the proper role of government within an economy's monetary system." James A. Overdahl "Lawrence H. White has emerged as one of the most thoughtful monetary economists of his generation, and The Theory of Monetary Institutions fills an important lacuna in the literature. The book is mature and balanced; its encyclopedic knowledge of the literature covers a far broader range of material than conventional texts. I am aware of no other book that does such a superb job of placing institutional arrangements in theoretical and historical perspective." Hugh Rockoff, Rutgers University”

"The Theory of Monetary Institutions is a thorough and insightful treatment of the emergence and evolution of money and banking regimes. Professor White's brilliant exposition of alternative regimes is innovative and sheds a great deal of light upon the crucial features of contemporary money and banking institutions. This tour-de-force is a 'must-read'." Steve H. Hanke, The John Hopkins University

"Larry White's The Theory of Monetary Institutions provides a very clear, extremely readable and up-to-date overview of monetary theory. White provides a uniquely insightful perspective into a difficult and controversial area, and his arguments and analysis are unbeatable. All monetary economists should read it." Kevin Dowd, University of Sheffield

"White has written an academically rigorous text covering the theory of money, banking, and monetary policy. The text stands out from others in the way it describes the evolution of economists' thinking about monetary institutions. White excels in combining the historic with the contemporary, the abstract with the tangible, and the theoretical with the practical. The chapters on alternative monetary regimes will no doubt challenge many widely-held views about the proper role of government within an economy's monetary system." James A. Overdahl

"Lawrence H. White has emerged as one of the most thoughtful monetary economists of his generation, and The Theory of Monetary Institutions fills an important lacuna in the literature. The book is mature and balanced; its encyclopedic knowledge of the literature covers a far broader range of material than conventional texts. I am aware of no other book that does such a superb job of placing institutional arrangements in theoretical and historical perspective." Hugh Rockoff, Rutgers University

Lawrence H. White is Professor of Economics at the University of Missouri - St. Louis. He has published articles in several journals, including the Journal of Money, Credit, and Banking; the Journal of Economic Literature; Business History Review; and American Economic Review. He is the author of Free Banking in Britain (Second Edition), and Competition and Currency. Dr. White holds an AB in Economics from Harvard University and a PhD in Economics from University of California, Los Angeles. His principal fields of study and lecture are monetary theory, banking history, the history of economic thought, and the future of money.

The Theory of Monetary Institutions analyzes the often overlooked - but fundamental - questions about monetary policy regimes:

• How and why have monetary institutions evolved into their present forms?
  
• What are the leading arguments for and against government involvement in money and banking?
  
• What models do we have for explaining how monetary authorities choose to behave in a discretionary fiat money regime, and how well do they fit?
  
• What alternatives to the current regime are available, and how would they work?
  

Using a history of thought approach, The Theory of Monetary Institutions begins with a logical evolutionary account of the development of market monetary institutions from barter to the inter-bank clearinghouse. It analyzes the behavior of a metallic money standard, the market forces regulating the quality of bank-issued money, and the "naturalness" of the various roles associated with central banking.

The second section of the book scrutinizes the major welfare arguments used to justify government roles in the monetary and banking systems - such as Samuelson's "non-optimality of money-holding under laissez-faire" and Diamond and Dybvig's parable about the danger of bank runs - and identifies their strengths and weaknesses. The third section reviews the major positive theories for explaining central bank behavior in a discretionary fiat regime: the seigniorage motive, political business cycles and the trap of discretion. Concluding with a discussion of alternative regimes, the book examines monetary rules, private fiat money and a multi-commodity standard.

The Theory of Monetary Institutions analyzes the often overlooked - but fundamental - questions about monetary policy regimes: How and why have monetary institutions evolved into their present forms? What are the leading arguments for and against government involvement in money and banking? What models do we have for explaining how monetary authorities choose to behave in a discretionary fiat money regime, and how well do they fit? What alternatives to the current regime are available, and how would they work?

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