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Hahn Lecture: The Advent of Macroeconomics: The Coevolution of Money, Central Banks, and Monetary

Central banks today stand at the forefront of macroeconomic policy. And some central banks trace their origins as far back as the 17th century. Yet, explicit concepts of a central bank and monetary policy were not fully articulated until the 20th century, although, with some degree of circumspection, they can be used retrospectively in regard to earlier times. The oldest central banks were hardly central banks in the modern sense at their foundings. Rather they coevolved with the financial system and money itself. This lecture traces that coevolution and the related coevolution of monetary policy from commodity money and policies related to the maintenance of the quality of the coin or intentional debasement to support the fiscal aims of the state, through the support of the banking system in crises. The advent of macroeconomics can be located in fundamental role of the central bank in Knut Wicksell’s imaginative exploration of the pure credit economy, which continues to frame the conception of macroeconomic and monetary policy to this day.

The Royal Economic Society is one of the oldest and most prestigious economic associations in the world. It is a learned society, founded in 1890 to promote the study of economic science.

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