Victoria Chick on the monetary foundations of macroeconomics

With the possible exception of her work on economic methodology, the monetary economics of Victoria Chick lay at the heart of her macroeconomics, and her general approach to economics. Chick’s monetary economics started with her participation in the revival of monetary theory in the wake of the Radcliffe Report, which argued that liquidity rather than money should be the central operational concept for theory and policy. When the monetary revival turned to monetarism, Chick countered by insisting on the monetary nature of macroeconomic variables, rather than confining money to a “monetary sector” that was added on to a “real” economy. She developed this approach by showing how macroeconomic relations were affected by banking evolution, and later rejected the concept of monetary endogeneity based on central bank operations in inter-bank markets. However, the critical part that she gave to monetary innovation in Keynes’s macroeconomics is an original but controversial part of her intellectual legacy.