New Monetarist Economics

This paper articulates the principles and models of New Monetarism, which is our label for a body of recent work on money, banking, payments systems, and asset markets. The approach that has something in common with Old Monetarism, but also some key di¤erences. It has little in common with New Keysianism. A series of models is described. This illustrates what has been done in recent monetary theory, and leads us to a benchmark model that has a wide range of applications. We use the benchmark model to exposit and discuss some Old Monetarist and New Keynesian ideas. Then, through a series of examples, we show how the framework can be applied to issues in payments, banking, and asset pricing. We thank many friends and colleagues for useful discussions and comments, as well as the NSF for …nancial support.