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Money Matters

Some Puzzles, Anomalies and Crises in the Standard Macroeconomic Model

Syed F. Mahmud, Kaoru Yamaguchi and Murat Yülek

The 2007 financial crisis and the Great Recession have prompted a debate about the state of macroeconomics, and many orthodox economists have argued that macroeconomics has entered a Dark Age.

This book discusses the shortcomings of the standard macroeconomic model (SMM). The SMM failed to explain the real world and anticipate the global financial crises. The main reasons for this failure have been attributed to its inability to assign an active role of money and by the absence of appropriate modelling of financial markets.

The book also discusses how the SMM can be reformed to better account for the real world and policy prescriptions, such as the Chicago Plan, that can reduce the risks emanating from excessive money creation by banks.

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About the Authors


Syed F. Mahmud is a professor of economics at Bilkent University, one of the most renowned private universities in Turkey. He holds a Ph.D. degree in economics from McMaster University (Canada) in 1986, and has over 35 years of experience in both teaching and academic research. He has held his faculty position at Bilkent University since 1989. During his tenure at Bilkent University, he has taught many courses both at graduate and undergraduate level and supervised Masters and Ph.D theses. In recent years, his research has primarily been focused on banking and finance. Applied microeconomics, using both parametric and non-parametric econometric techniques, has been one of his leading fields of specialization. He has published many papers in leading journals of economics. He has a keen interest in developing macroeconomic models based on the System Dynamic Approach and using it to evaluate the workings of alternative banking proposals, including equity-based financial systems.

Kaoru Yamaguchi is Director at Japan Futures Research Center. He holds a Ph.D. degree in economics, University of California, Berkeley (1985). He held academic posts in the USA at California State University, Hayward, the University of San Francisco, the University of Hawaii, Manoa, and then in Japan at Osaka Sangyo University, and Doshisha University (Business School) in Kyoto. He was visiting scholar at Sloan School of Management, MIT (1998, 1999), Hawaii Futures Research Center, University of Hawaii (2001), Haas School of Business, University of California, Berkeley (2003), and Victoria Management School, Victoria University of Wellington,...

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