AN INTRODUCTION TO MONEY AND BANKING

By Colin D. Campbell (Professor of Economics) and Rosemary G.Campbell. New York: Holt, Rinehart andWinston, Inc., 1972. 398 pp. $ll.

The market for undergraduate money and banking texts is crowded with books distinguishable one from another mainly on stylistic grounds and the quality of art work and binding. The Campbells' new work is a refreshing exception as the first text to reflect some of the rapid gains in monetary theory in the last decade of "monetarist revolution" against the former Keynesian orthodoxy. Both theories are presented as competing explanations, but the modern quantity theory is given pride of place over the traditional IS-LM model as well as the advantage of extensive reviews of the empirical evidence. Those who have found substantial supplementation of a main text necessary to give their students a taste of what has been going on in monetary theory for the last ten or fifteen years will find this book most attractive. Although supplementary reading would be required to use this book successfully, it can be concentrated on special topics and not the presentation of basic concepts or correction of substantive errors.

The first 60 percent of the book is devoted to a thorough survey of the institutions of the commercial banking system and related financial markets and to an exposition of the money supply process. This is worth while not only for the general student but also for the economics major who goes on to graduate school where institutional information is generally assumed known. A review of US monetary history since the Civil War provides a bridge between the institutional description and monetary theory, summarizing the former discussion and motivating the latter. The unique part of the book, as stated above, is the theoretical portion. Here simple versions of the modern quantity theory and the IS-LM version of the Keynesian model are presented as alternative hypotheses and explained further by discussion of the questions of inflation and unemployment. The main issues are outlined, and it is left for the instructor to flesh out the argument and provide conclusions. One slight problem in the presentation is that, in an understandable effort to keep the two competing hypotheses in easily comparable form, the modern quantity theory is presented in the static C + I + G incomeexpenditures model instead of as an essentially dynamic model. This is mostly a matter of taste, and it could be argued that the gain would not sufficiently offset the additional expositional difficulty.

It should be noted that the book is well and clearly written, without the trivial disgressions which so often confuse the money and banking student. The exposition is nearly all verbal and graphical with only the most restrained of mathematics.

Mr. Darby is visiting Assistant Professor ofEconomics at the University of California,Los Angeles, and Assistant Professor ofEconomics at the Ohio State University.