1.0.Introduction
There has been a link between financial development and real growth of economies. Financial development together with growth in banking stimulates entreprenuer action and this transfers resources from the traditional sector to modern sector.
This paper is divided into two sections; Section A-Monetary Economics that covers the following topics; Money in the macro economy, Demand for money, Supply for money, Money and Inflation, Central banking and Monetary policy, International Financial Institutions and Policy, Monetary market and the Hansen Hickisian IS-LM curve analysis. Section (B) covers; Public revenue, Tax Burden, Incidence of Taxes, Classification and Choices of Taxes, Public Debt, Public expenditure and Public Budget.
Course Objectives:
The main objective of the course is to equip learners with analytical skills in understanding the basic concepts of monetary economics in the context of developing countries. It enables students acquire sufficient knowledge of monetary theory and the working of financial institutions that help in carrying out monetary and other macroeconomic policy analysis. The course also equips learners with issues relating to taxation and public expenditure
Table of Contents
Chapter One. MONEY.
1.0.Introduction.
1.1. Functions of Money
1.2. Defects of barter economy
1.3. Qualities of good money
1.4. Advantages of Monetary economy.
1.5. Historical evolution of money
1.6. The effects of Macroeconomic Policies on IS-LM curves
Chapter Two THE THEORY OF DEMAND FOR MONEY.
2.0. The quantity theory of money
2.1.Restatement of the Quantity theory of money
2.2. Keynesian theory of demand for money
2.3. The Baumol Tobin Model of Demand for Money
Chapter Three Money Supply
3.0. Definition of money supply
3.1.Determinants of Money Supply
3.2.Commercial Banks and the Credit Creation process
Chapter Four. MONEY AND INFLATION.
4.0. Definition
4.1. Causes of Inflation in Uganda
4.2. Policies to curb Inflation in Uganda
Chapter Five. CENTRAL BANKING AND MONETARY POLICY.
5.0. Introduction
5.1. Functions of the Central Bank
5.2. Monetary Policy
Chapter Six. INTERNATIONAL FINANCIAL INSITITUTIONS.
6.0. Introduction.
6.1. International Monetary Fund (IMF).
6.2. Grievances of the third World.
6.3. Suggestions of the World.
6.4. The IMF Sphere of influence.
6.5. The World Bank
6.6. Capital flows in LDCs
6.7. Determinants of capital flows in LDCs.
6.8. Public debt.
6.9. Debt Relief.
Chapter Seven. PUBLIC REVENUE.
7.1. Taxation.
7.2. Characteristics of a good tax system
7.3. Direct taxes
7.4. Indirect taxes
7.5. Tax Incidence.
7.6. Tax Buoyancy and Tax elasticity
7.7. Public Finance Management.
Chapter Eight. MARKET FAILURE AND PUBLIC GOODS
8.0. Introduction
8.1. Monopoly.
8.2. Public goods.
8.3. Costly Information
8.4. Non – Existence of the Market.
8.5. Externalities.
8.6. Possible Remedies to Externality.
Chapter Nine. DETERMINANTS OF REVENUE.
9.1. Statistical Determinants
9.2. Institutional (Social determinants).
9.3. Tax Policy Determinants.
Chapter Ten GOVERNMENT BUDGET.
10.0. Introduction.
10.1. Types of budgets
10.2. The role of a budget.
10.3. Financing a deficit budget.
Objectives & Topics
The primary objective of this course is to provide students with essential analytical skills for understanding fundamental concepts in monetary economics, specifically tailored to the context of developing nations. The work examines the intricate relationship between financial development, macroeconomic stability, and effective public finance management.
- Monetary economics and the mechanics of money supply in a macro economy.
- Theoretical frameworks regarding the demand for money (Keynesian vs. Quantity Theory).
- The role and influence of central banking and international financial institutions.
- Mechanisms of public revenue, taxation principles, and government budgeting processes.
- Market failures, public goods, and the impact of externalities on economic efficiency.
Excerpt from the Book
1.1 Functions of money.
Unit of account. Money serves as a unit of account. It is used as a unit of value for carrying out calculations and accounting procedure so as to effect business transactions.
Standard measure of value to allow easy economic transaction. According to D.J.Brown, (1985:138), emphasizes facilitating the price system as a vital function of money. The relative prices of goods and services are determined through the intermediary of money. It usually reflects the quality and quantity of goods and services bought in the market.
Money is used as a standard for deferred payments so that it enables to effect transactions for payments to be done at some future date.
Money acts as a store of value and wealth. This entails money saved in the bank or money that is used to acquire a financial asset. For money to act as a store of value there should be stable prices so that the value of money is not eroded away.
Medium of exchange. It facilitates business transactions through space and time. Alternative to this function would be the barter trade.
Barter trade in the economy refers to the physical exchange of goods for goods. The condition for exchange in this market is usually the double coincidence of wants.
Summary of Chapters
Chapter One: Explores the fundamental role of money, its history, and how macroeconomic policies interact with IS-LM curve analysis.
Chapter Two: Analyzes the theoretical underpinnings of money demand, contrasting Classical quantity theory with Keynesian and Baumol-Tobin models.
Chapter Three: Defines money supply and examines its determinants, including the role of commercial banks in the credit creation process.
Chapter Four: Investigates the causes and potential policy remedies for inflation, with a specific focus on the Ugandan economic context.
Chapter Five: Discusses the function of central banks and the various tools of monetary policy used to manage economic stability.
Chapter Six: Covers international financial institutions like the IMF and World Bank, analyzing their influence, grievances from developing nations, and issues like public debt.
Chapter Seven: Provides an overview of public revenue, focusing on taxation types, equity principles, and the management of public finances.
Chapter Eight: Examines market failures, public goods, and the role of government intervention in addressing externalities.
Chapter Nine: Details the statistical and institutional factors that determine national revenue collection.
Chapter Ten: Explains the structure of government budgets, the roles they play in an economy, and methods for financing deficit budgets.
Keywords
Monetary Policy, Public Finance, Inflation, Central Bank, Money Supply, Credit Creation, Taxation, Public Goods, Market Failure, Externalities, IS-LM Model, IMF, World Bank, Fiscal Policy, Budgeting
Frequently Asked Questions
What is the core focus of this publication?
This book explores the intersection of monetary economics and public finance, specifically analyzing how these systems function within developing economies like Uganda.
What are the primary thematic areas covered?
The themes include the theory of money demand, the mechanics of inflation, central banking operations, international financial relations, taxation principles, and public budget management.
What is the central research aim?
The aim is to equip learners with the analytical skills necessary to understand monetary and fiscal policy, emphasizing the challenges and practical realities faced by developing nations.
Which scientific methods are utilized?
The work employs macroeconomic modeling, including IS-LM curve analysis, and evaluates economic theories alongside institutional data and historical case studies.
What topics are discussed in the main section?
The main sections cover money and banking, the theory of demand for money, money supply processes, inflation causes, central banking policies, and complex fiscal issues like taxation and debt.
What key terms characterize this work?
Key terms include monetary policy, public revenue, market failure, externalities, credit creation, and budgetary governance.
How does the book analyze market failure?
The book identifies causes such as monopoly, public goods, and externalities, proposing policy remedies like taxation, subsidies, and the establishment of property rights.
What does the text say about inflation targeting?
It highlights the importance of accountability and the publication of quantitative targets for central banks to manage inflation expectations effectively.
Why is the "Coase Theorem" mentioned?
It is cited to explain how efficient outcomes can be achieved through bargaining when property rights are clearly established, reducing the need for direct government intervention.
- Quote paper
- DOCTOR Akampurira Abraham (Author), 2013, Monetary Policy and Public Finance, Munich, GRIN Verlag, https://www.grin.com/document/214676
