1 Introduction

　1.1 Introduction to Part 1

　1.2 Introduction to Part 2

　1.3 Introduction to Part 3

　1.4 Introduction to Part 4

　1.5 Introduction to Part 5

　References

Part I Keynesian Economics and Price Theory

2 Price Theory in a Monetary Economy

　2.1 Introduction

　2.2 The Fundamental Equation

　　2.2.1 The Keynes-Walras Model

　　2.2.2 The Keynes-Chamberlin Model: The Welfare Economics Foundation of Aggregate Demand Management Policies

　2.3 The Legitimacy of the Functional Form of the Utility Function

　　2.3.1 The Utility Function and Price Index Theory

　　2.3.2 The Indivisibility of the Labor Supply

　2.4 The Quantity Theory of Money as an Extraneous Belief

　2.5 Monopolistic Competition in the Dynamic Monetary Economy

　　2.5.1 Inflation and Economic Welfare

　　2.5.2 Why is the Surplus Attributed to Monopoly Rents?

　2.6 Concluding Remarks

　References

Part II Applications to Labor Economics and Inflation Theory

3 The Existence of an Involuntary Unemployment Equilibrium

　3.1 Introduction

　3.2 The Political-Economic Meaning of Full-Employment Policy

　3.3 The Model

　　3.3.1 Setting Up the Model

　　3.3.2 The Nominal Wage Negotiation Process

　　3.3.3 Market Equilibrium

　3.4 Concluding Remarks

　References

4 The Phillips Curve and Inflation Theory Reconsidered

　4.1 Introduction

　4.2 The Model

　　4.2.1 The Maximization Problem of Economic Agents

　　4.2.2 Market Equilibrium

　4.3 Comparative Statics and Welfare Analysis of the Fiscal-Monetary Policy

　4.4 Concluding Remarks

　References

Part III Applications to International Economics

5 A Basic Model of a Flexible Exchange Rate System Under Perfect Capital Mobility

　5.1 Introduction

　5.2 The Equilibrium of the Balance of Payments Under Perfect Capital Mobility

　5.3 The Model

　　5.3.1 Individuals

　　5.3.2 Firms

　　5.3.3 The Government

　　5.3.4 Market Equilibrium

　5.4 The Employment Isolation Effect

　5.5 Fiscal and Monetary Policy

　5.6 Concluding Remarks

　5.7 Mathematical Appendix

　References

6 The Functions of a Key Currency: International Liquidity Provision and Insurance

　6.1 Introduction

　6.2 The Model

　　6.2.1 Structure of the Model

　　6.2.2 Construction of the Model

　　6.2.3 Market Equilibrium and International Liquidity Provision

　　6.2.4 The Persistent Imbalance in the Current Account and the Exchange Rate

　6.3 The Vulnerability of the Key-Currency System

　6.4 The Key-Currency System and Optimum Currency Areas

　6.5 Concluding Remarks

　References

7 On the Necessity of Optimum Currency Areas: The Case for Perfect Capital Mobility and Immobile Labor Forces

　7.1 Introduction

　7.2 The Model

　　7.2.1 Structure of the Model

　　7.2.2 Construction of the Model

　　7.2.3 The Non-cooperative Game Between Central Banks and the Disparity in Income Distribution

　7.3 The Optimum Currency Area as the Unification of Central Banks

　7.4 The Difficulty of Constituting a Currency Area in Reality

　7.5 Concluding Remarks

　References

8 Universal Discipline or Individual Discipline: On the Viability of the Eurozone as a Nonadjustable Local Fixed Exchange Rate Regime

　8.1 Introduction

　8.2 The Model

　　8.2.1 Structure of the Model

　　8.2.2 The Maximization Problems of Economic Agents

　　8.2.3 Market Equilibrium

　　8.2.4 Comparative Statics and Welfare Implications of Austere Policies

　　8.2.5 The Hold-Up Problem

　8.3 Concluding Remarks

　References

9 Industrial Hollowing Under a Flexible Exchange Rate System

　9.1 Introduction

　9.2 The Model

　　9.2.1 Structure of the Model

　　9.2.2 Optimization Problems of Economic Agents

　　9.2.3 Market Equilibrium

　9.3 Concluding Remarks

　References

10 On the Function of Gold Standard in Idealism and Reality

　10.1 Introduction

　10.2 The Gold Standard in Idealism: Disbelief in Gold

　　10.2.1 A Model of the Specie Flow Theory and the Isolation Effect

　　10.2.2 Specie Flow

　10.3 The Gold Standard in Reality: Confidence in Gold

　　10.3.1 Confidence in the Intrinsic Value of Gold

　　10.3.2 The Gold Standard in Reality: Business Cycles Diffuse Internationally

　　10.3.3 Perturbations in the Level of Confidence in the Intrinsic Value of Gold

　10.4 Concluding Remarks

　References

Part IV Applications to Economic Growth Theory

11 Dexterity as a Source of Economic Growth

　11.1 Introduction

　11.2 The Model

　11.3 Dexterity as the Engine for the Growth of a Firm

　11.4 Concluding Remarks

　References

12 Monetary Economic Growth Theory Under Perfect Competition: Can Monetary Expansion Really Enhance Economic Growth?

　12.1 Introduction

　12.2 The Model

　　12.2.1 Structure of the Model

　　12.2.2 Agent Maximization Problems

　12.3 Market Equilibrium: The Relationship Between Market Competitiveness and the Autonomy of Capital Investment

　　12.3.1 The Equilibrium of the Economy

　　12.3.2 Market Competitiveness and Fiscal Sustainability

　　12.3.3 Fiscal and Monetary Policy, Inflation, and the Economic Growth Rate

　　12.3.4 Economic Welfare and the Fairness of Income Distribution

　12.4 Concluding Remarks

　References

13 A Keynesian Monetary Growth Model Under Monopolistic Competition: Is Economic Growth Sustainable Without Government Help?

　13.1 Introduction

　13.2 The Model

　　13.2.1 Structure of the Model

　　13.2.2 Employees

　　13.2.3 Employers

　　13.2.4 The Government

　　13.2.5 The Equilibrium Condition for the Aggregate Goods Market

　13.3 The Sustainability of Economic Growth and Fiscal Deficits

　13.4 Concluding Remarks

　References

Part V Critiques of the Existing Monetary Theories

14 A Critique of Lucas’ Theory

　14.1 Introduction

　14.2 Lucas’ Theory in the Deterministic Case

　　14.2.1 Why Is Neutrality Upheld Under a Perfect Information Scheme?

　　14.2.2 “Confidence in Money” in the Lucas Model

　14.3 Lucas’ Theory in the Stochastic Case

　　14.3.1 What Are the Problems?

　　14.3.2 The Unsolvable Fixed-Point Problem

　　14.3.3 The Problem of Second-Stage Inference

　14.4 Concluding Remarks

　14.5 Mathematical Appendix

　　14.5.1 The First Step

　　14.5.2 The Second Step

　　14.5.3 The Final Step

　References

15 Does the Search Model Succeed in Describing a Monetary Economy?

　15.1 Introduction

　15.2 The Simplified Kiyotaki-Wright (1989) Model

　　15.2.1 The Structure of the Model

　　15.2.2 What Is the Substantial Contribution of the Search Model to Monetary Theory?

　15.3 The Kiyotaki-Wright (1991) Model and Its Properties

　　15.3.1 Structure of the Model

　　15.3.2 Assumptions

　　15.3.3 Analysis of the Model

　　15.3.4 Money as a Store of Value

　15.4 Concluding Remarks

　References

Appendix: Exchanges of Views Between Referees and the Author

Index