Modeling Monetary Economies

Rating:
Summary: Beautiful; economics as it should be written
Review: Economists have a responsiblity to communicate as simply as possible. Too often complex mathematics are an egotistic tool of the economist that merely frustrates the reader. Champ and Freeman's Modeling Monetary Economies is a wonderful volume that explains tough issues in monetary economics by building upon Wallace and Bryant's overlapping generations (OLG) model.

The OLG framework is a very simple framework that has its limitations, yet it is a powerful explanatory device. Champ and Freeman apply it to the following exercises:
* Introduce money into an economy--any grad student of economics (as I once was) will tell you this is no simple task! We take money for granted, of course, but mathematical models tend to imply that money is unnecessary! Just getting money into an economic model without unreasonable assumptions is itself an accomplishment.

* Inflation--again, not easy to do in other mathematical models of money--and anticipated inflation

* International currency exchange and the indeterminancy of the exchange rate

* Central banking and changes to the money supply

* Banks and lending

* Deficits and the national debt

* The interaction of all of the above

The book also has exercises in it that apply and extend the models introduced in each chapter.

RECOMMENDATION
I recommend this book for advanced year undergrads (in mathematical econ programs) and graduate students. It really is a great book that builds a conceptual knowledge of the interaction of the various components of monetary economics. This is useful for understanding more complicated dynamic optimization models. And it provides models that are useful in their own right and relevant as the basis for further (ie., dissertation) research.

Rating:
Summary: Beautiful; economics as it should be written
Review: Economists have a responsiblity to communicate as simply as possible. Too often complex mathematics are an egotistic tool of the economist that merely frustrates the reader. Champ and Freeman's Modeling Monetary Economies is a wonderful volume that explains tough issues in monetary economics by building upon Wallace and Bryant's overlapping generations (OLG) model.

The OLG framework is a very simple framework that has its limitations, yet it is a powerful explanatory device. Champ and Freeman apply it to the following exercises:
* Introduce money into an economy--any grad student of economics (as I once was) will tell you this is no simple task! We take money for granted, of course, but mathematical models tend to imply that money is unnecessary! Just getting money into an economic model without unreasonable assumptions is itself an accomplishment.

* Inflation--again, not easy to do in other mathematical models of money--and anticipated inflation

* International currency exchange and the indeterminancy of the exchange rate

* Central banking and changes to the money supply

* Banks and lending

* Deficits and the national debt

* The interaction of all of the above

The book also has exercises in it that apply and extend the models introduced in each chapter.

RECOMMENDATION
I recommend this book for advanced year undergrads (in mathematical econ programs) and graduate students. It really is a great book that builds a conceptual knowledge of the interaction of the various components of monetary economics. This is useful for understanding more complicated dynamic optimization models. And it provides models that are useful in their own right and relevant as the basis for further (ie., dissertation) research.

Rating:
Summary: Academic, organized, and extremely concise
Review: This book is a very good introduction to quantative monetary theories. Readers with science or engineering background can especially benefit from authors' concise mathematical expressions. It gives a clear and academic view about fundamental theories, so don't expect to see a lot of economical data or "stories".

Rating:
Summary: A thoughtful introduction to mathematical economics
Review: This book is an example of how mathematics is intelligently used in economics, and the understanding of the latter is thereby enhanced. Only basic algebra is used, yet the authors are able to make non-trivial explanation about economic phenomena, from why money must exist to inflation to payment system. The text is mathematical and abstract, but as I read it, my frame of mind remains firmly that of an economist, and not of a mathematician (which is as it should be). The text is carefully written, flowing and anticipative of difficulties that a reader may have.

This is not an introductory text to economics, and I reject the idea that those with strong mathematical background should be introduced to economics in a different way from others. Any beginner, mathematical or not, should read Samuelson and the like first.