The Fall and Rise of Keynesian Economics

By John Eatwell; Murray Milgate | Go to book overview

13
The Analytical Foundations
of Monetarism

The nature of the relationship between the general price level and the quantity of money (variously defined) has been a matter of dispute throughout the history of economics. Failure to resolve the debate suggests a failure to define in a precise manner, or ever to agree upon, the issues at stake. This failure is evident in the debates surrounding the modern revival of monetarism. Writers who claim that the issues are fundamentally theoretical are opposed by those who argue that it is empirical assumptions that divide the protagonists; and analyses of short-run dynamics—always a fruitful environment for the ad hoc—are counterposed to studies of long-run equilibrium. This chapter will attempt to elucidate some of the issues by examining the theoretical foundations of monetarism. Paradoxically, these foundations do not lie in the realm of monetary theory but, rather, in theories of the determination of real output.

Beginning from the equation of exchange, or monetary identity, MVPY, it is evident that even if the velocity of circulation may be assumed to be relatively stable, determined in the longer run by institutional phenomena, a direct behavioral link between M and P alone requires that Y be independently determined. Thus, the classical version of Say’s Law, in which the level of output is determined by the level of accumulation and the social productivity of labor, given that saving and investment are assumed equal, was the basis of classical monetarism (on the classical theory of output; see Green, 1982). Similarly, the neoclassical version of Say’s Law, in which the level of output is determined in the

-273-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
The Fall and Rise of Keynesian Economics
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
/ 423

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.