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Gresham College:Prof Jadjit Chadha – Money, Monetary Policy and Central Banks – The Meeting of Art and Science: #1/6 – From Gold To Paper And Back Again


About this series

Somewhere in the centre of a space that contains economics, history and politics there is a need for the state to control the value of money. The competence of the government in this field seems to signal something quite important about the capacity of a state to deal with its collective problems. So much so that some consider sound money to be the ultimate public good – supplied by the state but of use to all private agents in their ongoing attempt to make plans for the future hampered by so many types uncertainty. The story of monetary policy making is one that, surprisingly, has not been told anywhere in terms of its basic concepts. Of course, there are financial histories, central banking histories and the daily grind of judgement on whether interest rates are too high or too low which occupies us so fully that many think these judgements are what economists actually do. But there is no clear guide to the principles that structure monetary policy debate. This series of lectures seeks to fill this gap.

About this lecture

Money was linked historically to the value of commodities such as gold in order to help preserve its value and encourage its wide and ongoing use. There are many examples of countries temporarily delinking from commodity standards. This lecture will explore the consequences of tying monetary value to commodities and why there are better choices for a government than a commodity standard.

Professor Jagjit Chadha

Jagjit Chadha was the Mercers’ School Memorial Professor of Commerce at Gresham College from 2014-2018 (now renamed Professor of Business). He is Director of the National Institute of Economic & Social Research (NIESR) and has also acted as an academic adviser to HM Treasury, the Bank of England and many policy-making institutions around the world. His main interests lie in macroeconomics, with a particular focus on monetary issues.

Prior to taking up his position at NIESR in 2016, Professor Chadha was Professor of Economics at the University of Kent, a position he had held since 2007. At the University of Kent, he held the position of Professor and Chair in Money and Banking at the Department of Economics and he is a Visiting Professor at the University of Cambridge. He is also Chair of the Money, Macro and Finance Research Group and a specialist adviser to the Treasury Committee. Prior to this, he was Chief Quantitative Economist at BNP Paribas, where he developed analytical, calibration and econometric tools for modelling the macroeconomy and pricing bonds, asset prices and exchange rates. He has worked as an advisor and researcher at the Bank of England, working on monetary economics, in particular on the interaction of financial markets and monetary regimes. He has also acted as an academic adviser to HM Treasury and extensive policy-making institutions around the world.

Macroeconomics forms Professor Chadha’s main research area, with a particular focus on monetary issues. His interests lie mostly, but not exclusively, with dynamic stochastic general equilibrium (DSGE) models in which he works on developing richer financial mechanisms in these models for example to incorporate money, bank behaviour, inventory and the term structure of interest rates. As a result of his time at the Bank of England and also at BNP Paribas he also has strong interests in the operation and function of financial markets and has an interest in understanding the informational herding behaviour of market participants.

Professor Chadha’s intellectual history of the development of monetary practice is to be published under the title, Money, Monetary Policy and Central Banks: The Meeting of Art and Science. He is the author of The Euro in Danger, with Michael Dempster and Derry Pickford (Searching Finance, 2012). He is the editor of the ongoing series, Modern Macroeconomic Policy Making (Cambridge University Press) and also of Dynamic Macroeconomic Analysis, co-edited with Sumru Altug and Charles Nolan (Cambridge University Press, 2003). In addition to this, he is widely published in academic journals.

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