Brief Outline of Topics Covered in Lecture 9
Chapter 20 Money Demand
Quantity Theory of Money
- Velocity of Money and Equation of Exchange
- Quantity Theory
- Quantity Theory of Money Demand
The Cambridge Approach
Is velocity a constant?
Keynes’s Liquidity Preference Theory
- Transactions Motive
- Precautionary Motive
- Speculative Motive
- Putting the Three Motives Together
Further Developments in the Keynesian Approach
- Why Transactions demand depends upon i (Baumol)
- Tobin's Uncertainty Theory
- Friedman’s Modern Quantity Theory of Money
Video:
Additional Reading:
- Spot the Euro effect - Antonio Fatas
- Fed Official Backs New Growth Push - WSJ.com
- Fed considers its stimulus options - Washington Post
- IPads and Speed, of Hotel Wi-Fi-On the Road - NYTimes.com
- The Future of Cash - FRBSF Economic Letter
- Finance, long-run growth, and economic opportunity - Ross Levine
- Should Some Bankers Be Prosecuted? - Madrick and Partnoy
- Is Regulatory Uncertainty a Problem? - Treasury Blog
- Jean-Claude Trichet's dire tenure at the ECB - Dean Baker
- The Recession in Pink and Blue - Nancy Folbre
- Dudley Leaves Door Open to More Fed Action - WSJ
- Why do we need a financial sector? - Wouter den Haan
Application:
This is from the WSJ:
The U.S. Federal Reserve announced new figures Wednesday used to calculate next year’s reserve requirements for depository institutions.
For net transaction accounts–mostly checking accounts–the first $11.5 million in deposits will be exempt from reserve requirements in 2012, up from $10.7 million in this year.
The Fed will assess a 3% reserve ratio on net transaction accounts from $11.5 million up to $71.0 million, compared with a ceiling of $58.8 million this year.
And the Fed will assess a 10% reserve ratio on net transaction accounts in excess of $71.0 million. The Fed didn’t change the reserve ratios in its annual indexing announcement.
Banks must hold a percentage of net transaction accounts as reserves in the form of vault cash, as a deposit in a Federal Reserve Bank or as a deposit in a pass-through account at a correspondent institution, the Fed said.
