Lawrence R. Klein lecture 2000 Whither monetary economics?

Neil Wallace

Research output: Contribution to journalArticlepeer-review

120 Scopus citations


I argue that monetary economics should be pursued by applying implementation theory to models which contain explicit frictions that make money essential. The argument has two parts. First, I argue that models in which real balances are assumed to be productive - models with money in utility or production functions or with cash-in-advance constraints - contain hidden inconsistencies. Second, I argue that the approach advocated is capable of providing new insights about some of the main issues in monetary economics: the effects of monetary shocks, the welfare cost of inflation, and the roles of inside and outside money.

Original languageEnglish (US)
Pages (from-to)847-869
Number of pages23
JournalInternational Economic Review
Issue number4
StatePublished - Nov 2001

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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