David Laidler and Bill Robson Win Donner Prize

My colleague, David Laidler, is one of the world's leading monetary economists. His list of publications and accomplishments attests to his knowledge and productivity.

I have valued his presence in the economics department at UWO because he is always happy to try to explain monetary economics to me, any time I ask.

Late last week it was announced that David Laidler and co-author William Robson won the prestigious Donner Prize

for their book TWO PERCENT TARGET: Canadian Monetary Policy Since 1991, published by the C.D. Howe Institute. Described by the Donner jury as “a masterful analysis of the evolution of Canadian monetary policy,” TWO PERCENT TARGET provides an informative and accessible explanation of the economics of monetary policy and a lucid account of its operation in Canada through the 1990s from two of the country's foremost commentators on the subject. [from the press release announcing the award]

The introduction of the book is available in pdf format on-line from the C.D. Howe website. This quotation captures the essence of the book very well.

We are convinced ... that the interaction between the supply of and the demand for money plays a key role in the transmission of central bank policy to the economy. We further believe that this view is supported by abundant empirical evidence of a close long-run correlation between money growth and inflation, and of shorter-run relationships in which variations in money growth precede the output and inflation rate fluctuations associated with them. These considerations have led us to treat the instability in the demand for various monetary aggregates that has been evident at times in Canada and other economies since the early 1980s as a complication in analyzing money’s role in monetary policy processes, rather than a justification for ignoring it.

Therefore, the stock of money plays a larger role in our story than
is nowadays fashionable.

Beats the hell out of rationalized expectorations with instantaneous adjustments and over-lapping generalizations.