Another semester’s worth of reading is done—herewith is the review of the last book I assigned in an economics class this semester. (I also finished my the book for my tutorial—review forthcoming.) So, as soon as I get through the assorted articles I assigned (5 left to read) and all the grading (I don’t even want to think about that), it is on to Summer Reading.
But, before the Summer Reading Reviews commence, my money and banking class ends with:
Davies and Green, Banking on the Future
This book is in a class of its own. At one level, it is a textbook on modern monetary policy. But, it doesn’t read like a textbook—it is actually well-written and doesn’t have all the annoying features of modern textbooks (high prices, lots of multi-colored graphs and boxes and sidebar notes—it actually reads like a, you know, book). But, even though it doesn’t look like a textbook, it is one. It is meticulously organized, with each chapter being a very good overview of the state of the art conventional wisdom on each topic covered. Curiously, this leaves the book without much of an audience. I liked it because it is a fantastic reference book. I am not sure if my students will like it though because it doesn’t have a gripping narrative flow—it is probably better read one chapter at a time than all at once. And outside the college class market, I am not sure if anyone would want to read it—you’d need someone who thought, “I’d like to take a course on monetary policy, but I am not in college, and I don’t want to read an insipid, overpriced textbook. I wonder if there is a well-written book that covers all the sorts of topics which would be covered in a class on monetary policy.” I am not at all sure how large that world is. And if by some chance you do fit that category, don’t hesitate to buy this book. If you are looking for a great causal read, though, this book won’t fit the bill.
My favorite chapter, partly because it was material I have never seen before, was the one which examined the efficiency of central banks—how much do they spend relative to their output? If we treat central banks like firms and look a their costs, how well do they do? The variance here is surprising, really surprising. Some central banks are enormously inefficient compared to others—I would have thought they all had some general base level of inefficiency which would have been about the same across countries. The reality—some countries have central banks whose input measures (costs, employees, etc) are off the charts even compared to other central banks. Consider, for example, employees per one million inhabitants. The Bank of England has 31 employees per million inhabitants. For Japan the number is 40. The US is at…68, which sounds high, until you look further. Belgium is at...210. France has 220, Greece has 279, and Luxembourg has 446. And the last four countries are part of the European System of Central Banks which has its own staff of 161 per million inhabitants. The Fed suddenly looks like a model of efficiency.
Also, it is worth noting that the reading for my money and banking class this year was far above average in overall quality—2010 was a good year for money and banking papers and books. The only downside is that one of my favorite things to assign is now out of print. It was published by the Federal Reserve Bank of New York, and given that they aren’t all that efficient anyway (see above), you would think they could have just kept it in print. You can still read it here, but it loses something not holding the actual book in hand.
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