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Indirect Convertibility and Quasi-futures Contracts: Two Non-operational Schemes for Automatic Stabilisation of the Price Level

Author

Listed:
  • Colin Rogers

    (School of Economics, University of Adelaide)

  • Thomas K. Rymes

    (Department of Economics, Carleton University)

Abstract

This paper examines two proposals for automatic stabilization of the price level based on indirect convertibility and something called a 'quasi futures contract'. These two schemes represent attempts to render operational ideas implicit in the Black (1970) Fama (1980) and Hall (1982) vision of the monetary system. Criticisms of the two schemes have been rejected by their exponents. The paper clarifies the analytical issues at stake in this debate and concludes that both schemes do suffer from fundamental flaws which would render them nonoperational. Hence, neither scheme offers an operational basis for a laissez faire banking system or provides a workable alternative to current methods of stabilising the price level.

Suggested Citation

  • Colin Rogers & Thomas K. Rymes, 2001. "Indirect Convertibility and Quasi-futures Contracts: Two Non-operational Schemes for Automatic Stabilisation of the Price Level," School of Economics and Public Policy Working Papers 2001-04, University of Adelaide, School of Economics and Public Policy.
    • Handle: RePEc:adl:wpaper:2001-04
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    References listed on IDEAS

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    1. Cowen, Tyler, 1997. "Should Central Banks Target CPI Futures?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(3), pages 275-285, August.
    2. T.K. Rymes & Colin Rogers, 1995. "Keynes' Monetary Theory of Value and Modern Banking," Carleton Economic Papers 95-11, Carleton University, Department of Economics, revised 1997.
    3. Schnadt, Norbert & Whittaker, John, 1993. "Inflation-Proof Currency? The Feasibility of Variable Commodity Standards," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 214-221, May.
    4. Sumner, Scott, 1995. "The Impact of Futures Price Targeting on the Precision and Credibility of Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 89-106, February.
    5. Robert E. Hall, 1982. "Inflation: Causes and Effects," NBER Books, National Bureau of Economic Research, Inc, number hall82-1.
    6. McCallum, Bennett T., 1985. "Bank deregulation, accounting systems of exchange, and the unit of account: A critical review," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 23(1), pages 13-45, January.
    7. George A. Selgin & Lawrence H. White, 1994. "How Would the Invisible Hand Handle Money?," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1718-1749, December.
    8. Barro, Robert J, 1979. "Money and the Price Level under the Gold Standard," Economic Journal, Royal Economic Society, vol. 89(353), pages 13-33, March.
    9. Greenfield, Robert L & Woolsey, W William & Yeager, Leland B, 1995. "Is Indirect Convertibility Impossible? Comment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 293-297, February.
    10. Fama, Eugene F., 1980. "Banking in the theory of finance," Journal of Monetary Economics, Elsevier, vol. 6(1), pages 39-57, January.
    11. Tyler Cowen & Randall S. Kroszner, 1994. "The new monetary economics," Chapters, in: Peter J. Boettke (ed.), The Elgar Companion to Austrian Economics, chapter 86, Edward Elgar Publishing.
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    Cited by:

    1. Colin Rogers, 2003. "Doing Without Money: A Critical Assessment of Woodford's Analysis of Monetary Policy in a Post-monetary World," School of Economics and Public Policy Working Papers 2003-01, University of Adelaide, School of Economics and Public Policy.
    2. Colin Rogers, 2004. "Doing Without Money: A critical assessment of Woodford's analysis," Method and Hist of Econ Thought 0411001, University Library of Munich, Germany.
    3. Malte Krueger, 2012. "Money: A Market Microstructure Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(6), pages 1245-1258, September.

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    More about this item

    Keywords

    indirect convertibility; quasi-futures contracts;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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