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Analysis and insight into trends
in money and banking, and their impact
on the world's leading economies

Staff Research



Reflections on Monetarism by Professor Tim Congdon

© 1992 - Edward Elgar Publishing

This collection of articles and papers was first published in 1992. Its objective was to add insights to the analysis of British economic policy in a particularly interesting period. Between the mid-1970s and late 1980s the main theme of British macroeconomic management was the attempt to establish an efficient framework of monetary control. For much of the period this framework was provided by a target for the growth of the money supply (broadly defined, to include bank deposits). The rational was simple: if excessive monetary growth caused inflation, targeted reductions in the rate of monetary growth would stop it.

The ideas behind the policy framework were known as "monetarism". Since the publication of this book, monetarism has fallen out of favour. particularly in academia. Professor Congdon has nonetheless remained convinced that controlling the money supply remains the key to stable, macroeconomic growth. A full 25 years later, the articles and papers contained in this book thus remain as relevant as ever.

This book is available as a pdf which can be accessed here or else you can access the publisher's website and download all or part of the book by clicking on the image on the left.



Keynes, the Keynesians and  Monetarism by Professor Tim Congdon

© 2007 - Edward Elgar Publishing

This book follows on from "Reflections on Monetarism" (See above) and is a series of essays relating to the debate between monetarists and Keynesians, including  the reputation of Keynes himself and how the two schools of thought have quarrelled about his legacy.

The debate between the two schools originated in the 1950s in the USA with the publications of a number of influential academic papers arguing that the quantity of money  played an important role in the determination of national income. In the 1970s and 1980s, monetarist economists occupied highly influential positions in the UK and US governments, but in spite of the vindication of their position by the economic history in the early 1980s in particular, the debate is still far from over, especially given  the dominance of Keynesianism in many UK universities - and indeed, in sections of the media.    

This book can be downloaded in pdf format chapter by chapter from the publisher's website by clicking on the image on the left.



Money in the Great Recession

Edited by Professor Tim Congdon

© 2017 - Edward Elgar Publishing

In the book's introduction and first chapter Tim Congdon proposes that the Great Recession can be explained by a large fall in the rate of growth of the quantity of money, broadly-defined, which reflected developments in the banking system. In particular, he suggests that the regulatory demand for higher capital/asset ratios from September 2008 caused banks to shrink their risk assets and so led to the destruction of money balances. While banks undoubtedly had problems of their own making, officialdom's tightening of regulation was mistimed and inappropriate, and had "vicious deflationary consequences at just the wrong point in the business cycle". The Great Recession could have been avoided if quantitative easing (to boost the quantity of money), rather than the increase in capital ratios, had been pursued earlier.

The book features contributions from nine authors in total, taking different perspectives on the Great Recession

For a review of this book, by Nick Ronalds in Enterprising Investor, please click here.

For a review by Michael Reddell in Central Banking, please click here.

For more details see the publisher's website or click on the image of the book's cover.



HOW FUNCTIONAL IS THE EUROZONE? AN INDEX OF EUROPEAN ECONOMIC INTEGRATION THROUGH THE SINGLE CURRENCY. By Juan E. Castañeda and Pedro Schwartz

This article is a step towards empirically assessing how close the Eurozone is to becoming an 'optimal currency area', as originally defined by Mundell (1961). For this purpose we have compiled ten indicators, organised them in four partial indices, and summarised them in an overall indicator of 'optimality'. The resulting picture is mixed, with zone optimality not increasing when circumstances were favourable but the trend towards integration returning after the 2008-14 crisis. The suggestion is that disintegration during the crisis, rather than being evidence of failure of the Eurozone when the going was tough, showed a self-healing mechanism at work. However, our measurements and indices show that optimality is much further away than it was in 1999, when the euro was launched.'

For the 'Euro-map' dataset (with data on the 7 indicators used per country, 1999-2015), see here

In the next few weeks we will be calculating the indices of optimality of the UK £ and the US $ so we can compare the performance of three major currency areas before, during and after the Global financial Crisis'.


  • For the dispersion charts, see here.
  • For Inflation (HICP) - Real Exchange Rate, see here
  • For Public Debt - Public Deficit (% GDP), see here
  • For Inflation (HICP) - Unit Labour Costs, see here
  • For GDP growth - Inflation, see here
  • For GDP growth - Unemployment rate, see here
  • For Real Exchange Rate - Unit Labour Cost, see here
  • For the indices of the optimality of the Euro, see here





Central Bank independence in small open economies

By Juan Castaneda, Forrest Capie and Geoffrey Wood

This article forms Chapter 5 of Central Banks at a crossroads - What can we learn from history? edited by Michael D. Bordo, Øyvind Eitrheim, Marc Flandreau and Jan F. Qvigstad

© 2016 - Cambridge University Press

We conduct an empirical analysis of eight economies covering more than a century and find that independent central banks tend to be more durable in their independence in small open economies than in large economies. This is because the former have the option of being, and often are high trust societies, which allows the writing of simple, and therefore less affected by shocks, central bank contracts, and as Milton Friedman argued many years ago in his pioneering discussion of central bank independence, central banks need a set of instructions and that takes the form of a contract.

You can listen to Dr Castaneda discussing it in the video below:-





European Banking Union- Prospects and challenges

Edited by Juan E. Castañeda, David G. Mayes, Geoffrey Wood

© 2016 - Routledge

Recent failures and rescues of large banks have resulted in colossal costs to society. In wake of such turmoil a new banking union must enable better supervision, pre-emptive coordinated action and taxpayer protection. While these aims are meritorious they will be difficult to achieve. This book explores the potential of a new banking union in Europe.

This book brings together leading experts to analyse the challenges of banking in the European Union. While not all contributors agree, the constructive criticism provided in this book will help ensure that a new banking union will mature into a stable yet vibrant financial system that encourages the growth of economic activity and the efficient allocation of resources.

This book will be of use to researchers interested in Banking, Monetary Economics and the European Union. You can listen to Dr Castaneda discussing it in the video below:-



Banking and finance in the early years of the United States of America were chaotic. Two of the founding fathers - Thomas Jefferson and James Madison - were hostile to banking, since the issue of paper money led to inflation and default. According to Jefferson,

"...banking establishments are more dangerous than standing armies"

The Great Recession of 2008 - 09 renewed concern about the potential role of the banking system in social and financial instability, and argued for more research and analysis about this critical topic.

Mission Statement

The purpose of the Institute of International Monetary Research is to demonstrate and bring to public attention the strong relationship between the quantity of money on the one hand, and the levels of national income and expenditure on the other.

The Institute is heavily involved in the analysis of banking systems, particularly their role in the creation of new money balances. The relationships between money and national income/expenditure hold in all countries over long periods, and the Institute's research covers many countries. The "quantity theory of money" could be characterized as an "always-and-everywhere theory".

The Institute - which is associated with the University of Buckingham in England - was set up in 2014, in the aftermath of the Great Financial Crisis (a.k.a., "the Great Recession") of 2007 - 2009. It is an educational charity.

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