The Real (Social) Experience of Monetary Policy

This paper takes a socio-economic approach to considering money in relation to real experience, focusing on the real effects of monetary policy. While most of the economics literature focuses on interest-rate setting as the core tool of monetary policy, we focus here instead on signalling by the central bank as a mechanism for influencing expectations and behaviour in conditions of uncertainty. This involves addressing the social-conventional expectations among different groups (a mechanism for dealing with uncertainty) applied to their particular ways of framing the real and financial sectors. Actual credit conditions faced by borrowers in turn are the outcome of the conventional view among banks as a result of their framing and the influence of central bank signalling. These relations between central banks, banks and the non-bank public in turn normally rest on long-established relations of trust. We consider the real effects of monetary policy in circumstances where trust has broken down

The methodological role of the history of economic thought

The purpose of this paper is to explore the methodological role of the history of thought in economic theorising. The connection is drawn between Adam Smith’s use of the history of ideas for his own theorising on the one hand and his espousal of the Newtonian experimental method on the other. The history of ideas formed an important part of the evidential base. On this basis, the argument is then developed that study of the history of economic thought contributes to the modern development of theory within a pluralist, open-system approach. Further the significance of different approaches to history itself is highlighted both for understanding Smith and for considering modern debates about the history of thought. The paper is thus offered as further support for the important role for the history of economic thought in economic teaching and practice