The views expressed are those of the authors and do not necessarily reflect those of the Bank of England. The authors would like to thank: Olivier Blanchard, Alec Chrystal,

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contributions to the field of international monetary economics were path breaking and have stood the test of time well. He chose his problems with great foresight and penetrating intuition, imagining economies with features like perfect capital mobility,

Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals. The Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad.

The views expressed in this paper are those of the author. No responsibility for them should be attributed to the Bank of Canada. Contents Acknowledgements........................................................................................................................ iv Abstract............................................................................................................................................v 1. Introduction..................................................................................................................................1 2. The quantity theory of money, monetarism, and money-growth targeting..................................2

published, one would not think of a triple-entry bookkeeping without thinking of Yuji Ijiri. In his monograph(1982) he states many reasons why double-entry bookkeeping system can and should be extended beyond the current practices inherited from the practices over the past 500 years ago with reference to Pacioli(1494), Goethe(1824), Cayley(1894), Paton(1917), Sombart(1928), Littleton(1928, 1933), Peragallo(1938), Ijiri(1975), and Chatfield(1977). Ijiri(1982) explores possible extensions of double-entry bookkeeping by so-called temporal and differential triple-entry bookkeeping on the one hand, and another triple-entry bookkeeping on the basis of so-called casual(intra-dimensional) double-entry bookkeeping and/or three-valued (inter-dimensional) logic. In his discussion of the temporal triple-entry bookkeeping, Ijiri extends the conventional equality of Past=Present with Future and Wealth=Capital with Budget, as he interprets the two dimensions in double-entry bookkeeping. On the differential triple-entry bookkeeping, he extends Stock=Flow concept into Wealth=Capital=Force and Wealth=Income=Force. Stating "there is no reason why temporal and differential triple-entry bookkeeping are

[Note to the Referee: I made a few revisions in light of comments at the April 2003 HOPE Conference at Duke. Unfortunately I have not had time to respond to all of the points that were raised. This summer I plan to do a more complete literature search on the impact of the decline of Bretton Woods. Michael Bordo indicated that I failed to cite several other authors would had expressed some of the same views on the demise of Bretton Woods.] I can be reached at:

The trend in mainstream economic thought about macroeconomic policy has been towards minimalism. In the optimistic Keynesian phase of the 1960's, it was assumed that both fiscal and monetary policy were effective tools for macroeconomic management. But the influence of monetarist and New Classical critiques has led to a gradual erosion of theoretical support for activist government policy. First fiscal policy fell by the wayside, perceived as too slow and possibly counterproductive in its impacts. Then New Classical and rational expectations critiques suggested that even monetary policy was ineffective. Thus the role of government policy has been reduced to a cautious effort not to make things worse B in effect a return to an economics of laissez-faire. In contrast, a sustainability perspective implies that radical and proactive government policies are required to achieve economic development that is both socially just and ecologically sound. The path of laissez-faire leads to increasing intra- and international inequality as well as increasing environmental destruction. To some extent the course of market economies can be steered through the use of sound microeconomic policies. But the fundamental redirection required for sustainable development cannot be achieved without reorienting macroeconomic

This paper surveys the developments in the field of international finance, in particular the research of economists on foreign exchange rates. That might be of interest to physicists working on the econophysics of exchange rates. We show how the econophysics agenda might follow naturally from the economists´ research. We also present our own work on the econophysics of exchange rates. PACS: 05.40.+j;02.50.-r