This textbook presents a comprehensive treatment of the most important topics in monetary economics, focusing on the primary models monetary economists have employed to address topics in theory and policy. Striking a balance of insight, accessibility, and rigor, the book covers the basic theoretical approaches, shows how to do simulation work with the models, and discusses the full range of frictions that economists have studied to understand the impacts of monetary policy.
For the fourth edition, every chapter has been revised to improve the exposition and to reflect recent research. The new edition offers an entirely new chapter on the effective lower bound on nominal interest rates, forward guidance policies, and quantitative and credit easing policies. Material on the basic new Keynesian model has been reorganized into a single chapter to provide a comprehensive analysis of the model and its policy implications. In addition, the chapter on the open economy now reflects the dominance of the new Keynesian approach. Other new material includes discussions of price adjustment, labor market frictions and unemployment, and moral hazard frictions among financial intermediaries. References and end-of-chapter problems allow readers to extend their knowledge of the topics covered.
Monetary Theory and Policy continues to be the most comprehensive and up-to-date treatment of monetary economics, not only the leading text in the field but also the standard reference for academics and central bank researchers.
Carl E. Walsh is Professor of Economics at the University of California, Santa Cruz. He is a Visiting Scholar at the Federal Reserve Bank of San Francisco.
Students will find, in Walsh's text, a clear, comprehensive survey of all major developments in monetary economics, extending back three decades and running through the present. Experienced researchers, meanwhile, can easily focus on selected chapters, covering topics of special interest.
Peter Ireland, Professor of Economics, Boston College
This book is an invaluable and unique resource on the theory and practice of monetary economics. Its insightful and comprehensive coverage—including of the extraordinary actions taken by central banks after the global financial crisis—will serve as an excellent guide to students, researchers, and practitioners.
Glenn D. Rudebusch, Senior Policy Advisor, Federal Reserve Bank of San Francisco; coauthor of Yield Curve Modeling and Forecasting
Carl Walsh's book is the single most important reference for anybody interested in monetary economics. The book does a splendid job of covering key theoretical models and linking them to empirics that make the exposition relevant and engaging. I recommend this book most strongly.
Yuriy Gorodnichenko, Associate Professor of Economics, University of California, Berkeley
The latest edition of Carl Walsh's textbook is an invaluable resource for understanding the remarkably rapid evolution of monetary policy over the past decade, as major central banks have deployed new strategies, tools, and operating procedures to mitigate the effective lower bound and to facilitate the smooth withdrawal of extraordinary monetary stimulus.
Andrew Levin, Professor of Economics, Dartmouth College
Password-protected supplements for educators include: solution manual
