Reflections on Allan H. Meltzer’s Contributions to Monetary Economics and Public Policy

Book Description

Allan H. Meltzer (1928–2017), a leading monetary economist of the twentieth century, is memorialized in eleven essays by prominent economists. Among his achievements, Meltzer transformed the field of central banking and dissected the economic disasters of the 1930s and the first decade of the 2000s as well as the recovery from high inflation in the early 1980s.

The first chapters focus on his landmark A History of the Federal Reserve, 1913–1986, explaining that the Fed’s biggest successes are tied to its adherence to classical monetary theory and also examining the monetarist counterrevolution. Next, the book turns to the monetary transmission mechanism and his close work with Karl Brunner on the Brunner-Meltzer Model; it argues that Meltzer’s understanding of monetary economics could be used to measure the impact of the Fed’s activities. Finally, Meltzer’s contributions to public policy are examined, including his proposed reforms to the International Monetary Fund and his activities at the Carnegie Mellon Graduate School of Industrial Administration.

The conference papers that compose this volume celebrate Meltzer’s fifty-year career at Carnegie Mellon. The book ends with a transcribed interview, conducted a few months before his death, in which he shares sharp-witted insights about economics and his legacy.

About the Editor

David Beckworth, editor, is a senior research fellow at the Mercatus Center at George Mason University and a former international economist at the US Department of the Treasury. A widely published author on monetary policy, he hosts the podcast Macro Musings, in which he and his guests discuss important macroeconomic issues of the day.

Advance Praise for the Book

“A nice overview of the important lifework of Allan Meltzer, one of the great monetary economists of the twentieth century.”

—Alan Greenspan, chairman of the US Federal Reserve Board, 1987–2006

“This book succeeds in highlighting the extraordinary contributions of Allan Meltzer, sometimes with Karl Brunner, to the analysis of monetary economics, history, and policy. Anyone interested in monetary institutions should read it.” 

—Paul Tucker, Harvard Research Fellow, former central banker, and author of Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State

“Allan Meltzer was a towering figure in economics who left an indelible mark on our understanding of the theory and practice of monetary policy. The concise and eloquent essays in this book describe clearly the monumental contributions he made to monetary theory, monetary history, and the economics of central banking, and why they remain vitally important today. Well worth reading for anyone with an interest in monetary matters.”

—Jeffrey M. Lacker, Distinguished Professor, Virginia Commonwealth University

About the Contributors

David Beckworth is a senior research fellow at the Mercatus Center at George Mason University and a former international economist at the US Department of the Treasury. He is the author of Boom and Bust Banking: The Causes and Cures of the Great Recession (Independent Institute, 2012). His research focuses on monetary policy, and his work has been cited by the Wall Street Journal, the Financial Times, the New York Times, Bloomberg Businessweek, and the Economist. He has advised congressional staffers on monetary policy and has written for Barron’s, Investor’s Business Daily, the New Republic, the Atlantic, and National Review. He also hosts the popular podcast Macro Musings, where he and his guests discuss the important macroeconomic issues of the past, present, and future.

Michael D. Bordo is a professor of economics and the director of the Center for Monetary and Financial History at Rutgers University–New Brunswick in New Jersey. He has held previous academic positions at the University of South Carolina and at Carleton University in Ottawa, Canada. He has been a visiting professor at the University of California, Los Angeles; Carnegie Mellon University; Princeton University; Harvard University; and Cambridge University—where he was the Pitt Professor of American History and Institutions—as well as a visiting scholar at the International Monetary Fund and the Federal Reserve Banks of St. Louis and Cleveland, the Federal Reserve Board of Governors, the Bank of Canada, the Bank of England, and the Bank for International Settlement. He also is a research associate of the National Bureau of Economic Research in Cambridge, Massachusetts. He has a BA from McGill University, a MSc (econ) from the London School of Economics, and a PhD from the University of Chicago. He has published many articles in leading journals and authored or coedited 14 books on monetary economics and monetary history. He is editor of a series of books for Cambridge University Press: Studies in Macroeconomic History.

James Bullard is the president and CEO of the Federal Reserve Bank of St. Louis. He oversees the activities of the Eighth Federal Reserve District, including operations in the St. Louis headquarters and its branches in Little Rock, Arkansas; Louisville, Kentucky; and Memphis, Tennessee. He also participates on the Federal Reserve’s Federal Open Market Committee. Bullard is a noted economist and scholar, and his positions are founded on research-based thinking and an intellectual openness to new theories and explanations. In addition, he makes public outreach and dialogue a priority to help build a more transparent and accessible Federal Reserve. He is an honorary professor of economics at Washington University in St. Louis, where he also sits on the advisory council of the economics department. Bullard received his doctorate in economics from Indiana University in Bloomington and holds bachelor of science degrees in economics and in quantitative methods and information systems from St. Cloud State University in St. Cloud, Minnesota.

Joshua R. Hendrickson is an associate professor at the University of Mississippi. His work primarily centers on issues related to monetary theory, history, and policy. He has written extensively on nominal GDP targeting and the political economy of Bitcoin. His work has appeared in the Journal of Money, Credit and Banking, the Journal of Economic Dynamics and Control, Macroeconomic Dynamics, the Journal of Economic Behavior & Organization, Economics & Politics, Economic Inquiry, the Journal of Macroeconomics, and the Southern Economic Journal. He received his PhD in economics from Wayne State University and his MA and BA in economics from the University of Toledo.

Robert L. Hetzel is a retired economist from the Federal Reserve Bank of Richmond. He received an AB and a PhD from the University of Chicago. While at Chicago, he was in the Money and Banking workshop and did his thesis work under Milton Friedman. He joined the research department at the Federal Reserve Bank of Richmond in 1975, where, as senior economist and research advisor, he counseled the bank’s president on matters concerning his participation in meetings of the Federal Open Market Committee. His research agenda is the evolution of central banking in the modern regime of fiat money. He regularly writes articles on monetary policy in which he continues the Friedman monetarist tradition. His two recent books, both published by Cambridge University Press, are The Monetary Policy of the Federal Reserve: A History (2008) and The Great Recession: Market Failure or Policy Failure? (2012).

Peter N. Ireland is the Murray and Monti Professor of Economics at Boston College, a research associate in the Monetary Economics Program at the National Bureau of Economic Research, and a member of the Shadow Open Market Committee. Before joining the faculty at Boston College, Ireland held positions at Rutgers University and at the Federal Reserve Bank of Richmond. He received his PhD in economics from the University of Chicago. Ireland’s teaching and research focus on macroeconomics and monetary economics, particularly Federal Reserve policy and its effects on the United States economy. His work has appeared in the Journal of Monetary Economics, the Journal of Money, Credit and Banking, and the International Journal of Central Banking.

Robert E. Lucas Jr. is the John Dewey Distinguished Service Professor of Economics at the University of Chicago. He is a fellow of the Econometric Society, the American Academy of Arts and Sciences, and the American Philosophical Society, and a member of the National Academy of Sciences. He is a past president of the Econometric Society and the American Economic Association. In 1995, he received the Nobel Memorial Prize in Economic Sciences. Lucas received his BA in history and PhD in economics from the University of Chicago. He was a member of the faculty of the Graduate School of Industrial Administration at Carnegie Mellon University from 1963 until 1974. He joined the Chicago faculty in 1975. Among his books are Studies in Business-Cycle Theory (1981); Rational Expectations and Econometric Practice (1981), coedited with Thomas Sargent; Models of Business Cycles (1985); and Recursive Methods in Economic Dynamics (1989), with Nancy Stokey and Edward Prescott. His book Lectures on Economic Growth was published in 2002, and he published his Collected Papers on Monetary Theory in 2013.

Edward Nelson is a senior adviser at the Division of Monetary Affairs at the Federal Reserve Board in Washington, DC. As well as working previously at the Federal Reserve Board, he held prior positions at the Bank of England, the Federal Reserve Bank of St. Louis, and the University of Sydney. He has published many articles in the field of monetary economics and is author of the books The U.K.’s Rocky Road to Stability (2009), coauthored with Nicoletta Batini, and Milton Friedman and Economic Debate in the United States, 1932–1972 (forthcoming). Nelson received his PhD from Carnegie Mellon University. Allan Meltzer was a member of Nelson’s doctoral dissertation committee.

Gerald P. O’Driscoll Jr. is a senior fellow at the Cato Institute. Previously the director of the Center for International Trade and Economics at the Heritage Foundation, O’Driscoll was senior editor of the annual Index of Economic Freedom, copublished by Heritage and the Wall Street Journal. He has also served as vice president and director of policy analysis at Citigroup. Before that, he was vice president and economic adviser at the Federal Reserve Bank of Dallas. He also served as staff director of the congressionally mandated International Financial Institution Advisory Commission (the Meltzer Commission). O’Driscoll has taught at the University of California, Santa Barbara; Iowa State University; and New York University. He is widely published in leading publications, including the Wall Street Journal. He appears frequently on national radio and television, including Fox Business, CNBC, and Bloomberg Television. He is a member of the Mont Pelerin Society, and is president of the Association of Private Enterprise Education. O’Driscoll holds a BA in economics from Fordham University and an MA and PhD in economics from the University of California, Los Angeles.

Charles I. Plosser served as president and CEO of the Federal Reserve Bank of Philadelphia from 2006 until his retirement in 2015. He is currently a visiting fellow at the Hoover Institution at Stanford University and a member of the Board of Governors of the Financial Industry Regulatory Authority (FINRA). Before coming to Philadelphia, Plosser was the John M. Olin Distinguished Professor of Economics and Public Policy and director of the Bradley Policy Research Center at the William E. Simon Graduate School of Business Administration at the University of Rochester. His research interests include macroeconomics, monetary theory and policy, econometrics, and finance. He has published articles in the major economic journals and served as coeditor with Robert King of the Journal of Monetary Economics for twenty years. Plosser has been a visiting scholar at the Bank of England and the Federal Reserve Bank of Minneapolis. He also has served as a research associate at the National Bureau of Economic Research in Cambridge, Massachusetts. He earned a BA from Vanderbilt University and an MBA and PhD in economics from the University of Chicago.

George Selgin is a senior fellow and director of the Center for Monetary and Financial Alternatives at the Cato Institute, and professor emeritus of economics at the University of Georgia. He is the author of The Theory of Free Banking (1988), Bank Deregulation and Monetary Order (1996), Less Than Zero: The Case for a Falling Price Level in a Growing Economy (1997), Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage (2008), and Money: Free and Unfree (2017). Selgin holds a BA in economics and zoology from Drew University and a PhD in economics from New York University.

John B. Taylor is the George P. Shultz Senior Fellow in Economics at the Hoover Institution and the Mary and Robert Raymond Professor of Economics at Stanford University. He chairs the Hoover Working Group on Economic Policy and is director of Stanford’s Introductory Economics Center. Taylor served as senior economist on the Council of Economic Advisers under President Ford and President Carter, as a member of President George H. W. Bush’s Council of Economic Advisers, and as an economic adviser to multiple presidential campaigns. From 2001 to 2005, Taylor served as undersecretary of the Treasury for international affairs where he was responsible for currency markets and international development, oversight of the International Monetary Fund and the World Bank, and coordinating policy with the G-7 and G-20. Taylor formerly held positions as professor of economics at Princeton University and Columbia University. Taylor received a BA in economics summa cum laude from Princeton University and a PhD in economics from Stanford University.