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Studies in Macroeconomic History
Controlling Credit: Central Banking and the Planned Economy in Postwar France, 1948–1973
It is common wisdom that central banks in the postwar (1945–1970s) period were passive bureaucracies constrained by fixed-exchange rates and inflationist fiscal policies. This view is mostly retrospective and informed by US and UK experiences. This book tells a different story. Eric Monnet shows that the Banque de France was at the heart of the postwar financial system and economic planning, and that it contributed to economic growth by both stabilizing inflation and fostering direct lending to priority economic activities. Credit was institutionalized as a social and economic objective. Monetary policy and credit controls were conflated. He then broadens his analysis to other European countries and sheds light on the evolution of central banks and credit policy before the Monetary Union. This new understanding has important ramifications for today, since many emerging markets have central bank policies that are similar to Western Europe's in the decades of high growth.
350 pages, Hardcover
Published November 15, 2018
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Displaying 1 of 1 review
January 23, 2022
8/10
Controlling Credit is an excellent, scholarly study of the history and economics of the central bank of France (BdF) in the post-war period, with an emphasis on its use of credit controls. Credit controls are a form of central bank policy that have been phased out in many countries since the 70s, with focus now being on controlling monetary and financial conditions via interest rate policy. Conventional wisdom often treats the post-war Bretton Woods period as one where monetary policy was passive and financial repression was endemic. Through careful study, Monnet compellingly challenges this view showing that active use of quantitative credit policies were macroeconomically important and helped to manage financial allocation contra stories of financial repression.
While the entire book is a historical work, the first half focuses on legal, institutional, and cultural history of the BdF and the second half focuses more on the economic & financial dimensions of the period and credit policies. A student with broad interests will find interesting material cover to cover, but economics students may find the second half more to their tastes.
All together, Monnet's book is an incredibly rich study providing much food for thought. Chapters 4 and 6 in particular present a clear explanation and evaluation of group of policies whose byzantine design likely scares away less ambitious scholars. The work done to synthesize and assess these in a digestible way is impressive in and of itsself. That the empirical work suggests they were such powerful tools then adds to its great value and leaves lessons about the potential benefits and limitations of similar policies in contemporary times, which have seen some revival under the branding of "macroprudential" policy.
Controlling Credit is an excellent, scholarly study of the history and economics of the central bank of France (BdF) in the post-war period, with an emphasis on its use of credit controls. Credit controls are a form of central bank policy that have been phased out in many countries since the 70s, with focus now being on controlling monetary and financial conditions via interest rate policy. Conventional wisdom often treats the post-war Bretton Woods period as one where monetary policy was passive and financial repression was endemic. Through careful study, Monnet compellingly challenges this view showing that active use of quantitative credit policies were macroeconomically important and helped to manage financial allocation contra stories of financial repression.
While the entire book is a historical work, the first half focuses on legal, institutional, and cultural history of the BdF and the second half focuses more on the economic & financial dimensions of the period and credit policies. A student with broad interests will find interesting material cover to cover, but economics students may find the second half more to their tastes.
All together, Monnet's book is an incredibly rich study providing much food for thought. Chapters 4 and 6 in particular present a clear explanation and evaluation of group of policies whose byzantine design likely scares away less ambitious scholars. The work done to synthesize and assess these in a digestible way is impressive in and of itsself. That the empirical work suggests they were such powerful tools then adds to its great value and leaves lessons about the potential benefits and limitations of similar policies in contemporary times, which have seen some revival under the branding of "macroprudential" policy.
Displaying 1 of 1 review