Money, Interest and Capital: A Study in the Foundations of by Colin Rogers

By Colin Rogers

This publication provides a learn within the foundations of financial thought with numerous detailed good points. It includes elements: a critique of the forms of neoclassical financial concept, and a rigorous assertion of the rules of submit Keynesian financial idea. the 2 components replicate Joseph Schumpeter's contrast among financial theories within the divergent traditions of actual and financial research. half I bargains a singular critique of Wicksellian and neo-Walrasian common equilibrium models of actual research. The critique of Wicksell's financial thought demonstrates the overall impossibility of defining the usual interest rate with out which the loanable money conception collapses. The critique of neo-Walrasian financial idea, however, exploits the inessential function of 'money' in transitority equilibrium and overlapping generations versions and develops a unique interpretation of the Patinkin controversy and the Clower finance constraint. the consequences of those advancements are then traced in the course of the debates among monetarists and Keynesians. half II provides a rigorous argument for securing the principles of submit Keynesian financial conception within the culture of financial research. within the context of the evolution of the financial process from commodity funds to credits cash. Wicksell's common interest rate is changed via Keynes's marginal potency of capital that is in flip utilized to Myrdal's idea of financial equilibrium to derive a proper definition of Keynes's element of powerful call for. This ends up in the main novel characteristic of the booklet: the demonstration of the lifestyles of a long-run unemployment equilibrium with out the assumptions of inflexible wages. the primary of potent call for is proven to damage Say's legislations through putting a restrict at the ecocnomic growth of output earlier than complete employment is reached.

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It is in this sense that long-period equilibrium in a static model of a bank money economy is a species of conjectural equilibrium. This conclusion has interesting implications for monetary policy particularly when that policy has been influenced by monetarism. All monetary theorists are in search of policies that will promote stability in the financial markets and the economy as a whole. The monetarists seek to achieve such monetary stability by fixing the money stock and allowing interest rates to find their own market determined levels.

94 on Wed Aug 31 17:38:04 BST 2016. 004 Cambridge Books Online © Cambridge University Press, 2016 22 Wicksellian monetary theory theory of the natural or real rate of interest is crucial as it forms the hub around which all else rotates in Wicksellian monetary theory. From the Wicksellian perspective the debate between the loanable funds and liquidity preference theories is a case in point. Rejection of the loanable funds theory in favour of the liquidity preference theory entails abandoning the natural rate of interest.

21 on Wed Aug 31 17:34:37 BST 2016. 21 on Wed Aug 31 17:34:37 BST 2016. 21 on Wed Aug 31 17:35:18 BST 2016. 21 on Wed Aug 31 17:35:18 BST 2016. bid=CBO9780511559747 Cambridge Books Online © Cambridge University Press, 2016 WIGKSELLIAN MONETARY THEORY INTRODUCTION At one time, prior to the General Theory, WickselFs monetary theory represented the most sophisticated attempt to complement the static formalism of the quantity theory. Wicksell's ideas, in particular the distinction between the natural and market rates of interest, were adopted by many economists, including both Keynes - in the Treatise - and Dennis Robertson (1934).

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