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Sprenkle, Case M.




Monetary Theory


Case Middleton Sprenkle came to the University of Illinois as an Assistant Professor after receiving his PhD from Yale University in 1960 (BA, 1956, University of Colorado). A revision of his doctoral thesis was published in 1961. It developed the first modern model of option pricing and was used as the foundation of the equilibrium-pricing model developed by Black and Scholes who received the Nobel Prize mainly for their model.

Professor Sprenkle’s next two decades of research mostly involved papers and a short book on the demand for money. This work showed that the money demand function has been constantly shifting, is inherently unstable, and depends on interest rate spreads rather than any given interest rate. These results showed that the “monetarist” policy of a constant rate of increase in the supply of money would lead to bad policy almost all of the time. Later research concentrated on optimal monetary policy under various sources of uncertainty.

Professor Sprenkle’s teaching was primarily in graduate monetary theory and intermediate macroeconomics to juniors, seniors and Masters students. He taught over 7000 students in macroeconomics, often in large classes, and received numerous teaching awards.

In the 1960’s through the 1980’s he was a visiting scholar at the London School of Economics four times. He served as Chair of the Economics Department from 1976 to 1980, and Acting Head in 1995-6. In 1991, he became the first Director of the University of Illinois joint MBA program with the University of Warsaw in Poland.

Case Sprenkle retired from the Economics Department in 1996, but continued as Director of the joint MBA program until 2004 and has continued to teach a monetary economics course for the Master of Science in Policy Economics (MSPE) program until 2017.


Yale University, 1960


  • “Warrant Prices as Indicators of Expectations and Preferences”, Yale Economic Essays,1961, reprinted in The Random Character of Stock Market Prices, Paul H. Cootner, ed. MIT Press 1964
  • “A comment on the Modigliani-Miller Cost of Capital Thesis”, American Economic Review, Sept 1969 (with A .J. Heins), reprinted in The Theory of Business Finance, Archer and D’Ambrosio, eds. MacMillan, 2nd edition, 1976
  • “The Uselessness of Transactions Demand Models”, Journal of Finance, Dec. 1969, Reprinted in Monetary Theory, Thomas Mayer, ed., Elgar Publ., 1991
  • “The Precautionary Demand for Narrow and Broad Money”, (with M. H. Miller), Economica, Nov. 1980
  • “On the Precautionary Demand for Assets”, Journal of Banking and Finance, Oct. 1986


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