Horizontalism is an approach to money creation theory pioneered by Basil Moore which states Horizontalists and Verticalists: The Macroeconomics of Credit Money, Cambridge University Press. ISBN ; Palley, Thomas ( ). PDF | In Basil Moore published his book Horizontalists and Verticalists: The Macroeconomics of Credit Money, which this year celebrates. The latest issue of the Review of Keynesian Economics includes a special mini- symposium honouring the 25th anniversary of Basil Moore’s.

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We discuss this book from today’s perspective, vefticalists in particular whether Moore’s main assertions have been validated or rejected by the development of central bank practices and academic monetary economics. In our opinion, these criticisms were at the core of Moore’s reasoning. The online content platform for Edward Elgar Publishing. But we believe that this will take until mainstream and in particular textbook amd has freed itself completely from the assumption of an exogenous and controllable money stock that Moore identified to be so mistaken.

By using this site, you agree to the Terms of Use and Privacy Policy. The last major monograph on monetary theory, Woodford is already fully aligned with Moore’s observations from 15 years earlier.

It is remarkable that a book that must have appeared rather provocative when it was published has been corroborated so unambiguously by actual developments in policymaking within such a short period of time.

Because, if anything, the last 25 years have vindicated the substance of his thinking in a surprising way that could hardly have been anticipated in Views Read Edit View history. Horizontalism is an approach to money creation theory pioneered by Basil Moore which states that private bank reserves are not managed by central banks.

But Moore’s goal gradually comes closer. It was a time when mainstream monetary economics had already experienced fundamental changes that continue until today. The verticalist paradigm may apply in a world of commodity or pure fiat money. Show Summary Details Basil J. Under the influence of Paul Davidson, Moore began to develop his views on monetary macroeconomics, primarily as a response to the dominant paradigm of Friedman’s monetarism.


His thesis dealt with the effects of monetary policy on bank earnings.

This culminated in in his book, Horizontalists and Verticalists: From Wikipedia, the free encyclopedia. The recent writings of, for example, Godley and Lavoie confirm this point of view.

Horizontalism – Wikipedia

Virtually everything written in the monetary, macro- and growth literature — [is] either mis-specified or incomplete. Search Google Scholar Export Citation. This is further proof of the fact that the influence of the monetarist viewpoint is constantly diminishing among practitioners contemporaneous reserve accounting had been advocated by Milton Friedman as a key element of quantity oriented monetary policy implementation since No one appears responsible.

Monetary economics Economics and finance stubs. Moore BasilHorizontalists and Verticalists: For if the monetary base is endogenous and not under the control of the central bank, then the whole process of credit creation must be endogenous as well. Chapters 2 and 3 are devoted to banking and financial intermediation, and Moore thereby provides the ground for the right understanding of the logic of monetary policy actions.

It postulated nothing less than the failure of a key assumption taken for granted by almost every monetary macroeconomist in the twentieth century: One of the reasons why Moore may have devoted relatively little attention to the nineteenth century is his correct remark that commodity money is not the same as credit money, and that David Hume’s quantity theory was indeed appropriate as a theory for a commodity standard.

This page was last edited on 15 Juneat It states that an increasing demand for loans by bank customers leads to banks making more loans and creating more deposits, without regard to the size of the bank’s available reserves. One of us UB has to acknowledge that he himself largely overlooked Moore, in Bindseil a and b.


Festschrift in Honor of Basil J. This curious disjunction between theory and practice predates the enthusiasm of the s for monetary targets. Robert Lucas had issued his critique on econometric policy evaluation 12 years earlier and thereby triggered the avalanche of micro-based macroeconomics that still prevails today. These worries were largely confirmed by the developments that led to the financial crisis of — and the need for central banks to massively intervene to substitute for the drying-out of short-term capital market funding sources.

The Macroeconomics of Credit Moneywhich this year celebrates its 25th birthday. Instead reserves will be provided on demand at the bank rate set by the central bank.

The yearin which Moore wrote, was, however, not ripe for his view. Injust 6 years after Moore’s book was published, the gradual move to federal funds rate targeting was completed and the Fed today announces, after each Federal Open Market Committee FOMC meeting, its decision with regard to the fed funds target rate as we have known it ever since. In Basil Moore published his book Horizontalists and Verticalists: Qnd ideas may have shaped the course of post-Keynesian economics.

Although we have to admit that neither of us is much acquainted with the post-Keynesian literature, we believe that the Festschrift edited by Setterfield is evidence enough of Moore’s influence in this field of economics. It is even more remarkable that he warns already in against the increasing liquidity and financial stability risk relating to the issuance of short-term debt instruments by banks. Scrutinizing the Verticalista operating procedures of previous decades, Moorep.