Journal Article
The relationship between money and prices: some historical evidence reconsidered
Smith, Bruce D. (1988-07)
This article describes a debate about the validity of the quantity theory of money and offers further evidence against it. The evidence is primarily from the North American colonies of Virginia, New York, and Pennsylvania and regards the issue of measuring the money supply. Studies have shown that changes in colonial money and inflation are inconsistent with the quantity theory. Some have argued that those studies measure money wrong: specie belongs in the measure because the colonies were on a fixed exchange rate system with Britain; changes in colonial paper money were offset by specie ...
Quarterly Review , Volume 12 , Issue Sum , Pages 18-32

Conference Paper
Crises in competitive versus monopolistic banking systems
De Nicolo, Gianni; Boyd, John H.; Smith, Bruce D. (2004)
We study a monetary, general equilibrium economy in which banks exist because they provide inter-temporal insurance to risk-averse depositors. A "banking crisis" is defined as a case in which banks exhaust their reserve assets. This may (but need not) be associated with liquidation of a storage asset. When such liquidation does occur, the result is a real resource loss to the economy and we label this a "costly banking crisis." There is a monetary authority whose only policy choice is the long-run, constant rate of growth of the money supply, and thus the rate of inflation. Under ...
Proceedings

Conference Paper
Private money creation and the Suffolk Banking System
Smith, Bruce D.; Weber, Warren E. (1999)
Proceedings

Journal Article
Inflation, financial markets and capital formation
Boyd, John H.; Smith, Bruce D.; Choi, Sangmok (1996-05)
Review , Volume 78 , Issue May , Pages 9-35

Conference Paper
Moral hazard under commercial and universal banking
Boyd, John H.; Smith, Bruce D.; Chang, Chun (1998-08)
Proceedings , Issue Aug , Pages 426-471

Journal Article
Lessons from a laissez-faire payments system: the Suffolk Banking System, 1825-58
Weber, Warren E.; Rolnick, Arthur J.; Smith, Bruce D. (1998-05)
Review , Issue May , Pages 105-116

Working Paper
The effects of open market operations in a model of intermediation and growth
Smith, Bruce D.; Schreft, Stacey L. (1997)
This article presents a monetary growth model in which spatial separation and limited communication create a role for banks. Monetary policy interacts with the financial system's liquidity provision to affect the existence, multiplicity, and dynamical properties of equilibria. Moderate levels of risk aversion and tight monetary policy can lead to multiple steady rates. Dynamical equilibria can be indeterminate, with oscillatory paths. Thus financial market frictions are a source of indeterminacies and endogenous volatility. Under plausible conditions, tight monetary policy raises the nominal ...
Research Working Paper , Paper 97-03

Conference Paper
Deposit insurance and lender-of-last-resort functions
Smith, Bruce D.; Sleet, Christopher (2000)
Proceedings

Journal Article
Lessons from a laissez-faire payments system: the Suffolk Banking System (1825-58)
Weber, Warren E.; Rolnick, Arthur J.; Smith, Bruce D. (1998-07)
A classic example of a privately created interbank payments system was operated by the Suffolk Bank of New England (1825?58). Known as the Suffolk Banking System, it was the nation?s first regionwide net-clearing system for bank notes. While it operated, notes of all New England banks circulated at par throughout the region. Some have concluded from this experience that unfettered competition in the provision of payments services can produce an efficient payments system. But another look at the history of the Suffolk Banking System questions this conclusion. The Suffolk Bank earned ...
Quarterly Review , Volume 22 , Issue Sum , Pages 11-21

Working Paper
The evolution of cash transactions : some implications for monetary policy
Smith, Bruce D.; Schreft, Stacey L. (1999)
This paper considers the implications for monetary policy of a decreasing demand for outside money. It finds that even perpetual declines in the demand for base money pose no threat to the traditional methods employed for conducting monetary policy. The effects of such reductions in the demand for central bank liabilities, however, do depend on how monetary policy is conducted. Four monetary policy regimes are analyzed. With a policy of nominal-interest-rate targeting, a secular decline in the volume of cash transactions unambiguously leads to accelerating inflation. A policy of maintaining a ...
Research Working Paper , Paper 99-02