Perry Mehrling - Recent Papers

I think of my papers as following three broad lines, and think of the papers in each line as chapters of an eventual book.

I. Foundations of Monetary Economics. All of this work is aimed at developing a theory that takes as its starting point the inside credit character of modern money.

A. Apart from some early mathematical papers--

"A Note on the Optimum Quantity of Money" (1995),
"Idiosyncratic Risk, Borrowing Constraints and Asset Prices" (1998)

--most of this work remains unpublished. To my mind, the most important of these unpublished papers is my attempt at empirical implementation / verification,

"The Distribution of Corporate Liquidity: Trends and Fluctuations, 1954-1991" (1995).

B. In recent years I have focused my theoretical efforts more on developing lectures for my undergraduate and graduate courses (ECON V3265, G6712). Here is the first graduate lecture:

"What is Monetary Economics About?" plus Tables.

A more recent manifesto-like piece is

"The State as Financial Intermediary" (2000).

My current work focuses on understanding the central bank as a special kind of security dealer.

"Monetary Transmission Without Sticky Prices" (2005)

"Monetary Policy Implementation: A Microstructure Approach". (2006)

C. A central purpose of all this work is to provide a money theoretical basis for macroeconomics. My reasons for thinking this is the right way forward for macroeconomics come from my understanding of the history and development of macroeconomics. The development of my thinking on this line can be traced in my papers:

"The Relevance to Modern Economics of the Banking School View" (1996),
"The Evolution of Macroeconomics: The Origin of post-Walrasian Macroeconomics" (1996),
"The Money Muddle: The Transformation of American Monetary Thought, 1920-1970" (1998),
"Whither Macro?" (2002),
"The Revolution in Finance and the Development of Macroeconomics" (2005).

II. History of Monetary Economics (and Finance). All of this work is aimed at understanding why monetary economics has followed certain lines and neglected others, with a view toward assessing the possible value of the neglected lines for my own theoretical project.

A. My book The Money Interest and the Public Interest (1998) follows one distinctively American tradition through the life and work of Allyn Young, Alvin Hansen, and Edward Shaw. My paper

"The Vision of Hyman Minsky" (1999)

continues the line after Shaw. Another paper,

"How Did Schumpeter Do It?" (1999),

backtracks to consider one of the more important intellectual influences on this line.

B. My book Fischer Black and the Revolutionary Idea of Finance explores the rise of modern finance through a study of the life and work of Fischer Black. Here is a first draft of the book chapters that deal with Black's academic years:

"Understanding Fischer Black".

C. I've also been accumulating quite a number of papers on individual authors or monetary episodes, papers that I intend eventually to collect in a third book. Two such papers are the ones on Minsky and Schumpeter mentioned above, but there are several others as well already published. Here are some recent chapters:

"Economists and the Fed, Beginnings"
"Love and Death: The Wealth of Irving Fisher"
"The Monetary Economics of Benjamin Graham"
"Don Patinkin and the Origins of Postwar Monetary Orthodoxy"
"Laidler's Monetarism"
"Mr. Goodhart and the EMU"
"Interview with Paul Volcker"
"Mr. Woodford and the Challenge of Finance"
"The Arrow of Time".


III. Applications of Monetary Economics (and Finance). All of this work is intended to test my developing theoretical views by using them to analyze current events. I contemplate an eventual book on the financial problems of the welfare state, focusing on retirement finance (Social Security), education finance, and health finance. The outlines of the project as a whole appear in one of my courses (ECON BC3063 Senior Seminar ). Several papers represent eventual chapters in the book:

"The Social Mutual Fund: a Proposal for Social Security Reform"
"Spending Policies of Foundations: the Case for Increased Payout"
"The Repo Bank: A Narrow Bank Proposal"
"Minsky and Modern Finance: the Case of Long Term Capital Management"
"Endowment Spending Policy: An Economist's Perspective"
"A Robust Spending Rule"
"The Future of Financial Engineering"
"Why Opacity is the Best Policy".