CEU, Economics Department, 2006

Lecturer: Prof. Max Gillman
Course: 2 credits

1. Introduction

The course will study the general equilibrium theory of money within the neoclassical growth and business cycle models.
There will be a short review of empirical evidence (Section 2), with most of the time spent on theory (Section 3), and
some time on policy (Section 4).

2 Empirical Evidence

2.1 Money and Inflation
2.1.1 Money To Prices
Money demand, fixed exchange rate systems.

Cagan (1956), Fischer, Sahay, and Végh (2002), McCallum(1987), Chapter 15 "Episodes in US Monetary History",
Rolnick and Weber (1997).

2.1.2 VARS
Walsh (2003) Chapter 1, Cochrane (1998), Cochrane and Piszzesi (2002), Kraft (2003),
Ross (1998), Bernanke, Boivin, and Eliasz (2004)

2.1.3 Unit Roots and Granger Causality
Crowder (1998), Crowder, Ho¤man, and Rasche (1999), Crowder and Wohar (????), Perron (1989), Culver and
Papell (1997), Benati and Kapetanios (2002), Caporale and Gillana (2003)

2.1.4 Money Demand
Cagan (1956), Marcet and Nicolini (2003), Mark and Sul (2002).

2.2 Money, Output, Banking, and Tobin
Banking shocks, Depressions, VARs, anticipated effects, Tobin, TFP shocks.

Friedman and Schwartz (1963), Ghosh and Ghosh (1999), Calomiris andMason (2003b), Calomiris and Mason (2003a),
Kehoe and Prescott (2002), Hopenhayn and Neumeyer (2002), Ahmed and Rogers (2000), Gillman and Nakov (2003b),
Rapach (2003), Rapach and Wohar (2004), Uhlig (2003), Chari, Kehoe, and McGrattan (2003).

2.3 Money and Growth
Judson and Orphanides (1996), Ghosh and Phillips (1998), Gylfason and Herbertsson (2001), Barro (2001), Khan and
Senhadji (2001) and Gillman, Harris, and Matyas (2004), Gillman and Nakov (2004), Gillman and Wallace (2003).

2.4 Money and Unemployment
Haldane and Quah (1999), Ireland (1999), Romer (2000), Ball and Mankiw (2002), Shadman-Mehta (2001), Ljungqvist and
Sargent (2002).

2.5 Money and Commodity Prices
Hamilton (1983), Perron (1989), Hooker (1999), Hooker (2002), Jones, Leiby, and Paik (2002).

2.6 Money and Asset Prices
McGrattan and Prescott (2001), McGrattan and Prescott (2003), Gillman and Nakov (2003a).

3 Theory

3.0.1 Partial Equilibrium
Cagan (1956), Baumol (1952), Tobin (1956).

3.0.2 Overlapping Generations
Samuelson (195), Lucas (1972), Wallace (1980), Lucas (1996).

3.0.3 Money in the Utility Function
Samuelson (1947), Sidrauski (1967), Eckstein and Leiderman (1992), Lucas (2000), Walsh (2003) Chapter 2.

3.0.4 Cash-in-Advance
Hicks (1935), Lucas (1980), Lucas (1988).

3.0.5 Cash-Credit
Lucas and Stokey (1983), Lucas and Stokey (1987), Lucas (2000), Walsh (2003) Chapters 2 and 3, Ljungqvist and
Sargent (2000) 17:493-500.

3.0.6 Shopping Time
Lucas (2000), Walsh (2003), Chapter 3, Ljungqvist and Sargent (2000) 17:493-500.

3.1 The Welfare Cost of Inflation
Gillman (1993), Gillman (1995), Dotsey and Ireland (1996), Marty (1999), Lucas (2000), Marty (1967).

3.2 Money Demand and Velocity
Jovanovic (1982), Eckstein and Leiderman (1992), Bental and Eckstein (1997), Gillman (1993), Ireland (1995), Chari,
Christiano, and Eichenbaum (1995), Gillman, Siklos, and Silver (1997), Bental and Eckstein (1997), Gillman and Otto (2002),
Gillman and Kejak (2004), Szapary (2001), Gillman and Nakov (2004).

3.3 Money, Inflation, Output, and Growth
Sidrauski (1967), Tobin (1956), Tobin (1965), Stockman (1981), Temple (2000), Gomme (1993), Ireland (1994), Chari,
Jones, and Manuelli (1996), Haslag (1998), Gillman and Kejak (2005a), Gillman and Kejak (2005b)

3.4 Financial Development and the Theory of Credit

3.4.1 Generalized Exchange Theory: Clower Constraint as Isoquant of Exchange

Parente, Rogerson, and Wright (1999), Parente, Rogerson, and Wright (2000), Gillman and Kejak (2005a), Gillman
and Cziraky (2004).

3.4.2 Effect of Financial Development on Growth: The Role of Inflation
King and Levine (1993), Levine (1997), Levine, Loayza, and Beck (2000), Boyd and Smith (2001), Rousseau and
Wachtel (2001), Gillman, Harris, and Matyas (2004), Gillman and Harris (2004a), Dawson (2003), Gillman and Harris (2004b).

3.5 The Credit Channel

3.5.1 Kiyotaki and Moore Credit Constraints in DGE
Kocherlakota (2000), Walsh (2003) 7.3.2

3.5.2 Other Credit Constraints
Warner and Georges (2001), Walsh (2003)7: 323-362, Bohacek and Medizabal (2004).

3.6 Theory of the Aggregate Price Level
Gillman (2002), McCallum (2001a), Kocherlakota and Phelen (1999), Walsh (2003)4:164-171 and 10: 474-480,
Canzoneri, Cumby, and Diba (2001), Canzoneri and Diba (2005), Ljungqvist and Sargent (2000): 506-507, Schabert (2003b),
Cochrane (2003).

3.7 Monetary Business Cycles
Rose (1969), Cooley (1995), Cooley and Hansen (1998), Gavin and Kydland (1999), Berger, Kyle, and Scalise (2003),
Tallman and Bharucha (2000), Benk, Gillman, and Kejak (2004).

3.8 Liquidity Effect
Li (2000), Einarsson and Marquis (2000).

3.9 Money and the Open Economy
Calvo and Mishkin (2003), Walsh (2003)Chapter 6.

4 Policy
Tsiang (1969), Svensson (2003), McCallum (2000), McCallum (2001b), Walsh (2003)4: 135-172, Chapters 5, 8, 9, 10:
499-514, 11.

4.1 Second-Best Ramsey Theory of Optimal Iflation
Braun (1994), Gillman (2000), Lucas (2000), Ljungqvist and Sargent (2000): 510-514, Walsh (2003)4: 172-191, Gillman and
Yerokhin (2003), Burnell and Kim (2003), Alvarez, Kehoe, and Neumeyer (2002).

4.2 Rules versus Discretion
Bernanke and Mishkin (1997), Alvarez, Lucas, and Weber (2001), Schabert and Bruckner (2002), Schabert (2003a),
Schabert (2003b), Chowdhury and Schabert (2003), Linnemann and Schabert (2003), Siklos and Abel (2001).

A.  Homework and Exam

A.1 Weekly Sets: 20%
HW1: Any 5 of the questions in Walsh (2003) 2: 1-11; due Jan 16.
HW2: Any 4 of the questions in Walsh (2003) 3: 1-9; due Jan 23.
HW3: Walsh (2003) 4: 1, 2, 5, 7; one problem from the end of chapter 17 in Ljundqvist
and Sargent (2000); due Jan 30.

A.2 End of Course Project: 30%
Choose one of the following projects, due Feb 6:
1. Estimate a VAR with structural break testing for Money, Prices, and Income as in
Gillman and Nakov (2004), for a transition/accesion country that is pre-approved by the
2. Estimate the degree to which actual nominal interest rates followed the interest
rates that would have resulted if the country had followed a Taylor rule of monetary
policy, for a transition/accession country pre-approved by the lecturer.
3. Estimate money demand, as in Gillman and Cziraky (2005, BER forthcoming), or
4. Go through and derive all the equations in a journal article or working paper that
is found in the Reference list below and that is pre-approved by the lecturer.
5. Other suggestions.

A.3   Final Exam: 50%
The exam will be based on the lectures. Regular class attendance is recommended.

A.4   On Reserve
Monetary economics : theory and policy / Bennett T. McCallum McCallum, Bennett T.

Required Readings /RH ?332.4 MCC - AVAILABLE
Monetary theory and policy / Carl E. Walsh Walsh, Carl E.
Required Readings /RH ?332.4/6 WAL - AVAILABLE
Recursive macroeconomic theory / Lars Ljungqvist, T.J. Sargent Ljungqvist, Lars
Required Readings /RH ?339./015 LJU - AVAILABLE
Recursive macroeconomic theory / Lars Ljungqvist, T. J. Sargent Ljungqvist, Lars
Required Readings /RH ?339./015 LJU - AVAILABLE
Recursive macroeconomic theory / Lars Ljungqvist, T. J. Sargent Ljungqvist, Lars
Required Readings /RH ?339./015 LJU - AVAILABLE
Recursive macroeconomic theory / Lars Ljungqvist, T. J. Sargent Ljungqvist, Lars
Required Readings /RH ?339./015 LJU - AVAILABLE
Recursive macroeconomic theory / Lars Ljungqvist, T. J. Sargent Ljungqvist, Lars
Required Readings /RH ?339./015 LJU - AVAILABLE
Studies in the quantity theory of money / edited by Milton Friedmann ; with essays
by Milton Friedman.
Required Readings /RH ?332.4/01 FRI - AVAILABLE

Ahmed, S., and J. H. Rogers (2000): "In?ation and the Great Ratios: Long Term Evidence from the US",
Journal of Monetary Economics, 45(1), 3?36.

Alvarez, A., R. E. Lucas, and W. E. Weber (2001): "Interest Rates and Inflation", American Economic Review,
91(2), 219-225

Alvarez, F., P. Kehoe, and P. Neumeyer (2002): "The Time Consistency of Monetary and Fiscal Policies", Federal
Reserve Bank of Minneapolis Research Department, Working Paper 616, (616).

Ball, L., and G. Mankiw (2002): "The NAIRU in Theory and Practice,"Journal of Economic Perspectives, 16(4), 115-136.

Barro, R. (2001): "Human Capital and Growth,"American Economic Review, pp. 1?7.

Baumol, W. (1952): "The Transactions Demand for Cash: An Inventory -Theoretic Approach," Quarterly Journal of
Economics, 66, 545-66.

Benati, L., and G. Kapetanios (2002): "Structural Breaks in Inflation Dynamics," Bank of England manuscript.

Benk, S., M. Gillman, and M. Kejak (2004): "Credit Shocks in a Monetary Business Cycle,"Working Paper 7/2004,
Central European University, Budapest.

Bental, B., and Z. Eckstein (1997): "On The Fit of a Neoclassical Monetary Model in High Inflation: Israel 1972-1990,"
Journal of Money, Credit and Banking, 29(4, Part 2), 725?752.

Berger, A., M. Kyle, and J. Scalise (2003): Prudential Supervision: What Works and What Doesntchap. Did US Bank
Supervisors Get Tougher During the Credit Crunch, Easier During the Banking Boom, and Did It Matter to Bank Lending.
University of Chicago Press.

Bernanke, B., J. Boivin, and P. Eliasz (2004): "Measuring the Effects of Monetary Policy: A Factor-Augmented Vector
Autoregressive (FAVAR) Approach,"Federal Reserve Board Finance and Economics Discussion Series, (3).

Bernanke, B., and F. Mishkin (1997): "In?ation Targeting: A New Framework for Monetary Policy,?Journal of Economic
Perspectives, 11(2), 97?116.

Bohacek, R., and H. Medizabal (2004): "Credit Markets and the Propigation of Monetary Policy Shocks," Manuscript.

Boyd, J.H., R. L., and B. Smith (2001): "The Impact of In?ation on Financial Sector Performance,"Journal of Monetary
Economics, 47(2), 221-249.

Braun, R. A. (1994): "How Large is the Optimal In?ation Tax?,"Journal of Monetary Economics, 34(2), 201?214.

Burnell, S., and Y. Kim (2003): "Money, Tax Evasion and the Optimal In?ation Rate," Paper presented at the 2003
North American Summer Meetings of the Econometic Society.

Cagan, P. (1956): "The Monetary Dynamics of Hyperinflation," in Studies in the Quantity Theory of Money, ed. by M.
Friedman, pp. 25-120. The University of Chicago Press, Chicago.

Calomiris, C., and J. Mason (2003a): "Consequences of Bank Distress During the Great Depression," Americal
Economic Review, 93(3), 937-947.

(2003b): "Fundamentals, Panics, and Bank Distress During the Depression," Americal Economic Review,
93(5), 1615-1677.

Calvo, G., and F. Mishkin (2003): "The Mirage of Exchange Rate Regimes for Emerging Market Countries,"
Journal of Economic Perspectives, 17(4), 99-118.

Canzoneri, M., R. Cumby, and B. Diba (2001): "Is the Price Level Determined by the Needs of Fiscal Solvency?,"
American Economic Review.

Canzoneri, M., and B. Diba (2005): "Interest Rate Rules and Price Determinacy: The Role of Transactions Services of Bonds,"
Journal of Monetary Economics, 52(2), 329-344.

Caporale, G., and L. Gil-Ilana (2003): "Long Memory and Structural Breaks in Hyperinflation Countries,"
Journal of Economics and Finance, 27(2), 136-52.

Chari, V., L. Christiano, and M. Eichenbaum (1995): "Inside Money, Outside Money, and Short Term Interest Rates,"
Journal of Money, Credit, and Banking, 27(4, Part 2), 1354-1386.

Chari, V., L. E. Jones, and R. E. Manuelli (1996): "Inflation, Growth, and Financial Intermediation,"Federal Reserve
Bank of St. Louis Review, 78(3).

Chari, V., P. Kehoe, and E. McGrattan (2003): "Business Cycle Accounting," Working Paper 625, Federal Reserve
Bank of Minneapolis, Minneapolis.

Chowdhury, I., and A. Schabert (2003): "Assessing Money Supply Rules," Working Paper 2003/9, Department of Economics,
University of Glasgow.

Cochrane, J. (1998): "What Do the VARs Mean?: Measuring the Output Effects ofMonetary Policy,"Journal of Monetary
Economics, 41(2), 277-300.

(2003): "Fiscal Foundations of Monetary Regimes,"Manuscript, University of Chicago.

Cochrane, J., and M. Piszzesi (2002): "The Fed and Interest Rates?A High-Frequency Identification," American Economic
Review, 92(2), 90-95, Conference Proceedings.

Cooley, T., and G. Hansen (1998): "The Role of Monetary Shocks in Equilibrium Business Cycle Theory: Three Examples,"
European Economic Review, 42, 605-617.

Cooley, T. F. (ed.) (1995): Frontiers in The Business Cycle Research. Princeton University Press, Princeton, New Jersey, 1 edn.

Crowder, W., D. Hoffman, and R. Rasche (1999): "Identification, Long-Run Relations, and Fundamental Innovations in a
Simple Cointegrated System," Review of Economics and Statistics, 81(1).

Crowder, W., and M. Wohar (????): ?A Cointegrated Structural VAR Model of the Canadian Economy,"Applied Economics .,

Crowder, W. J. (1998): "The Long-Run Link Between Money Growth and Inflation," Economic Inquiry, 36(2), 229-43.

Culver, S., and D. Papell (1997): "FaIs There a Unit Root in Inflation Rate? Evidence from Sequential Break and Panel
Data Analysis," Journal of Applied Econometrics, 12(4), 435-444.

Dawson, P. J. (2003): 'Financial Development and Growth in Economies in Transition," Applied Economic Letters,
10, 833-836.

Dotsey, M., and P. N. Ireland (1996): "Inflation in General Equilibrium,"Journal of Monetary Economics, 37(1), 29-47.

Eckstein, Z., and L. Leiderman (1992): "Seigniorage and the welfare cost of inflation: Evidence from an intertemporal
model of money and consumption," Journal of Monetary Economics, 29(3), 389-410.

Einarsson, T., and M. H. Marquis (2000): "Liquidity E¤ects and Financial Intermediation in a Model with a Frictionless
Bond Market," Federal Reserve Bank of San Francisco Working Paper 00-08.

Fischer, S., R. Sahay, and C. Végh (2002): "Modern Hyper- and High Inflations," Journal of Economic Literature, 40(3),
837 ?880.

Friedman, M., and A. Schwartz (1963): A Monetary History of the United States, 1867-1960. Princeton University Press,
Princeton, NJ.

Gavin, W., and F. Kydland (1999): "Endogenous Money Supply and the Business Cycle,"Review of Economic Dynamics,
2, 347?369.

Ghosh, A., and S. Phillips (1998): "Inflation, Disinflation and Growth," IMFWorking Paper WP/98/68.

Ghosh, S., and A. Ghosh (1999): "East Asia in the Aftermath: Was There a Credit Crunch?," International Monetary Fund
Working Paper WP/99/38.

Gillman, M. (1993): "Welfare Cost of Inflation in a Cash-in-Advance Economy with Costly Credit,"Journal of Monetary
Economics, 31, 22-42.
Gillman, M. (1995): "A Comparison of Partial and General Equilibrium Estimates of the Welfare Cost of Inflation,"
Contemporary Economic Policy, 13(4), 60?71.

Gillman, M. (2000): "On the Optimality of Restricting Credit: Inflation-Avoidance and  Productivity,"Japanese Economic
Review, 51(3), 375-390.

(2002): "Keynes's Treatise: Aggregate Price Theory for Modern Analysis," European Journal of the History of Economic
Thought, 9(3), 430-451.

Gillman, M., and M. Harris (2004a): "Inflation, Financial Development and Endogenous Growth,"Working Paper wp24-04,
Monash University.

(2004b): Inflation, Financial Development and Growth in Transition Countries," Manuscript.

Gillman, M., M. Harris, and L. Matyas (2004): "Inflation and Growth: Explaining a Negative Effect," Empirical Economics,
29(1), 149?167, Reprinted in Baltagi, Badi H (Ed), 2004, Studies in Empirical Economics, "Panel Data: Theory and Applications",
Gillman, M., and M. Kejak (2004): "The Demand for Bank Reserves and Other Monetary Aggregates," Economic Inquiry,
42(3), 518-533.

Gillman, M., and M. Kejak (2005a): "Contrasting Models of the Effect of Inflation on Growth,"Journal of Economic Surveys,
19(1), 113-136.

Gillman, M., and M. Kejak (2005b): "Inflation and Balanced-Path Growth with Alternative Payment Mechanisms,"Economic
Journal, 115(500), 247-270.

Gillman, M., and A. Nakov (2003a): "Granger Causality of Nominal Oil and Gold Prices,"Working Paper, Central
European University.

Gillman, M., and A. Nakov (2003b): "A Revised Tobin Effect from Inflation: Relative Input Price and Capital Ratio Realignments,
US and UK, 1959-1999," Economica, 70(279), 439-450.

(2004): "Causality of the Inflation-Growth Mirror in Accession Countries,"Economics of Transition, 12(4), Forthcoming.

Gillman, M., and G. Otto (2002): "Money Demand: Cash-in-Advance Meets Shopping Time," Department of Economics
Working Paper WP03/02, Central European University, Budapest.

Gillman, M., P. Siklos, and J. L. Silver (1997): "Money Velocity with Costly Credit,"Journal of Economic Research, 2,

Gillman, M., and M. Wallace (2003): "Growth and Inflation in a Baltic Sea Transition Economy: The Case of Latvia," Manuscript.

Gillman, M., and O. Yerokhin (2003): "Ramsey-Friedman Optimality Within a Banking Time Economy,?Manuscript, Central
European University.

Gomme, P. (1993): "Money and Growth: Revisited,"Journal of Monetary Economics, 32, 51?77.

Gylfason, T., and T. Herbertsson (2001): "Does Inflation Matter for Growth?," Japan and the World Economy,
13(4), 405-428.

Haldane, A., and D. Quah (1999): "UK Phillips Curves andMonetary Policy,"Journal of Monetary Economics, 44(1),

Hamilton, J. D. (1983): "Oil and the Macroeconomy Since World War II," Journal of Political Economy, 91(2), 228-248.

Haslag, J. H. (1998): "Monetary Policy, Banking, and Growth," Economic Inquiry, 36, 489-500.

Hicks, J. (1935): "A Suggestion for Simplifying the Theory of Money,"Economica, 2(5) 1-19.

Hooker, M. (1999): "Oil and the Macroeconomy Revisited," The Federal Reserve Board Finance and Economics Discussion
Series 1999-43.

Hooker, M. A. (2002): "Are Oil Shocks Inflationary? Asymmetric and Nonlinear Speciflcations versus Changes in Regimes,"
Journal of Money, Credit, and Banking, 34(2), 540-561.

Hopenhayn, H., and P. Neumeyer (2002): "The Argentine Great Depression 1975-1990," Department of Economics
Working Paper 26, Universidad Torcuato Di Tella, University of Rochester.

Ireland, P. (1994): ?Money and Growth: An Alternative Approach,?American Economic Review, 55, 1-14.

(1995): "Endogenous Financial Innovation and the Demand for Money,"Journal of Money, Credit and Banking, 27(1),

Ireland, P. (1999): "Does the Time-Consistency Problem Explain the Behavior of Inflation in the United States?,"Journal of
Monetary Economics, 44(2), 279-291.

Jones, D., P. Leiby, and I. Paik (2002): "Oil Price Shocks and the Macroeconomy: What Has Been Learned Since 1996,"
Manuscript, Oak Ridge National Laboritory.

Jovanovic, B. (1982): Inflation and Welfare in the Steady State," Journal of Political Economy, 90(3), 561-577.

Judson, R., and A. Orphanides (1996): "Inflation, Volatility and Growth," Board of Governors of the Federal Reserve System
Finance and Economics Discussion Series, 96(19).

Kehoe, T., and E. Prescott (2002): "Great Depressions of the Twentieth Century," Review of Economic Dynamics, 5(1), 1-18,
University of Minnesota.

Khan, S., and A. Senhadji (2001): "Threshold Effects in the Relationship Between Inflation and Growth," IMF Staff
Papers 48(1).

King, R., and R. Levine (1993): "Finance and Gowth: Schumpter Might Be Right," Quarterly Journal of Economics,
pp. 717-737.

Kocherlakota, N. (2000): "Creating Business Cycles Through Credit Constraints," Federal Reserve Bank of Minneapolis
Quarterly Review, 24(2), 2-10.

Kocherlakota, N., and C. Phelen (1999): "Explaining the Fiscal Theory of the Price Level," Quarterly Review, 23(4), 2-10,
Federal Reserve Bank of Minneapolis.

Kraft, E. (2003): "What Can Monetary Policy Do? The Role of Monetary Policy in Economic Development in Croatia," Fifth
International Conference on Enterprise in Transition, Croatian National Bank.

Levine, R. (1997): "Financial Development and Economic Growth: Views and Agendas,"Journal of Economic Literature,
35(2), 688-726.

Levine, R., N. Loayza, and T. Beck (2000): "Financial Intermediation and Growth," Journal of Monetary Economics, 46, 31-77.

Li, V. (2000): "Household Credit and the Monetary Transmission Mechanism," Journal of Money, Credit and Banking,
32(3), 335-356.

Linnemann, L., and A. Schabert (2003): "On the Validity of the Taylor Principle in Open Economies with Ludger Linnemann,"
Manuscript, University of Cologne.

Ljungqvist, L., and T. Sargent (2000): Recursive Macroeconomic Theory. The MIT Press, Cambridge, Mass.

Ljungqvist, L., and T. Sargent (2002): "The European Employment Experience," CEPR Discussion Paper, (3543), Stockholm
School of Economics.

Lucas, Jr., R. E. (1972): "Expectations and the Neutrality of Money," Journal of Economic Theory, 4, 103-124.

(1980): "Equilibrium in a Pure Currency Economy," Economic Inquiry, 43, 203-220.

(1988): "Money Demand in the United States: A Quantitative Review," Carnegie-Rochester Conference Series, 29,

(1996): "Nobel Lecture: Monetary Neutrality,"Journal of Political Economy, 104(4), 661-82.

(2000): "Inflation and Welfare," Econometrica, 68(2), 247-275.

Lucas, Jr., R. E., and N. L. Stokey (1983): "Optimal Fiscal and Monetary Policy in an Economy Without Capital,"Journal of
Monetary Economics, 12, 55-93.

Lucas, Jr., R. E., and N. L. Stokey (1987): "Money and Interest in a Cash-in-Advance Economy,"Econometrica, 55,

Marcet, A., and J. Nicolini (2003): "Recurrent Hyperinflation and Learning,"American Economic Review, 93(5), 1476-1498.

Mark, N., and D. Sul (2002): "Cointegration Vector Estimation by Panel DOLS and Long Run Money Demand,"Technical Working
Paper 287, NBER, Cambridge, MA.

Marty, A. (1967): "Growth and the Welfare Cost of Inflationary Finance,"Journal of Political Economy, 75(1), 71-76.

Marty, A. L. (1999): "The Welfare Cost of Inflation: A Critique of Bailey and Lucas," Federal Reserve Bank of St. Louis Review,
81(1), 41-46.

McCallum, B. (1987): Monetary Economics: Theory and Policy. London:Collier Macmillan.

(2000): "Monetary Policy Analysis in Models Without Money," Manuscript, Carnegie Mellon University.

(2001a): "Indeterminacy, Bubbles, and the Fiscal Theory of Price Level Determination,"Journal of Monetary Economics, 47(1),

(2001b): "Should Monetary Policy Respond Strongly to Output Gaps,"Manuscript, Carnegie Mellon University.

McGrattan, E., and E. Prescott (2001): "Taxes, Regulations, and Asset Prices," Federal Reserve Bank of Minneapolis
Research Department Working Paper, (610), University of Minnesota.

(2003): "Average Debt and Equity Returns: Puzzling?," Federal Reserve Bank of Minneapolis Research Department Staff
Report, (313), University of Minnesota.

Parente, S., R. Rogerson, and R. Wright (1999): "Homework in Development Economics,"Federal Reserve Bank of
Cleveland Economic Review, 35(3), 21-35.

(2000): "Homework in Development Economics: Household Production and the Wealth of Nations,?Journal of Political
Economy, 108(4), 680-687.

Perron, P. (1989): "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, 57, 1361-1401.

Rapach, D. (2003): "International Evidence on the Long-Run Impact of Inflation," Journal of Money, Credit and Banking,
35(1), 23-48.

Rapach, D., and M. Wohar (2004): "Regime Changes in International Real Interest Rates: Are They a Monetary
Phenomenon?," Journal of Money, Credit, and Banking, Forthcoming.

Rolnick, A., and W. Weber (1997): "Money, Inflation, and Output under Fiat and Commodity Standards,"Journal of
Political Economy, 105(6), 1308-21.

Romer, D. (2000): "Keynesian Macroeconomics Without the LM Curve," Journal of Economic Perspectives, 14(2), 149-170.

Rose, H. (1969): "Real and Monetary Factors in the Business Cycle," Journal of Money, Credit and Banking, 1(2), 138-152,
Conference on Money and Economic Growth.

Ross, K. (1998): "Post Stabilization Inflation Dynamics in Slovenia," IMF Working Paper WP/98/27, International Monetary Fund.

Rousseau, P., and P. Wachtel (2001):. "Inflation, Financial Development and Inflation," in Economic Theory, Dynamics
and Markets: Essays in Honor of Ryuzo Sato, Edited by T. Negishi, R. Ramachandran and K. Mino, Kluwer Academic Press.

Samuelson, P. A. (1947): Foundations of Economic Analysis. Harvard University Press, Cambridge.

Schabert, A. (2003a): "On the Equivalence of Money Growth and Interest Rate Policy," Working Paper 2003/6, Department
of Economics, University of Glasgow.

(2003b): "On the Relevance of Open Market Operations,"HWWA Discussion Paper 257.

Schabert, A., and M. Bruckner (2002): ?Can Money Matter for Interest Rate Policy?," ZEI Working Paper B15, Center for
European Integration Studies.

Shadman-Mehta, F. (2001): "A Re-Evaluation Between Wages and Unemployment in the United Kingdom," Economica,
68(272), 567-606.

Sidrauski, M. (1967): "Inflation and Economic Growth,"Journal of Political Economy, 75, 796-810.

Siklos, P., and I. Abel (2001): "Is Hungary Ready for Inflation Rate Targeting?," Manuscript, Wilfred Laurier University.

Stockman, A. (1981): "Anticipated Inflation and the Capital Stock in a Cash-in-Advance Economy,"Journal of Monetary
Economics, 8(3), 387-393.

Svensson, L. (2003): "Escaping from a Liquidity Trap and Deflation: The Foolproof
Way and Others," Journal of Economic Perspective, 17(4), 145-166.

Szapary, G. (2001): "Banking Sector Reform in Hungary: Lessons Learned, Current Trends and Prospects,"National Bank
of Hungary Working Paper, (2001/5).

Tallman, E., and N. Bharucha (2000): "Credit Crunch or What? Australian Banks During the 1986-1993 Credit Cycle,"
Federal Reserve Bank of Atlanta Economic Review.

Temple, J. (2000): ?In?ation and Growth: Stories Short and Tall," Journal of Economic Surveys, 14(4), 395-426.

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