Is Monetarism Dead?
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Introductory Discussions of Supply and Demand and of the Working of the Price Mechanism Normally Treat Quantities Demanded and S
STRATHCLYDE DISCUSSION PAPERS IN ECONOMICS ‘ECONOMIC GEOMETRY’: MARSHALL’S AND OTHER EARLY REPRESENTATIONS OF DEMAND AND SUPPLY. BY ROY GRIEVE NO. 08-06 DEPARTMENT OF ECONOMICS UNIVERSITY OF STRATHCLYDE GLASGOW ‘ECONOMIC GEOMETRY’: MARSHALL’S AND OTHER EARLY REPRESENTATIONS OF DEMAND AND SUPPLY ROY GRIEVE1 ABSTRACT Does an apparent (minor) anomaly, said to occur not infrequently in elementary expositions of supply and demand theory, really imply – as seems to be suggested – that there is something a bit odd about Marshall’s diagrammatic handling of demand and supply? On investigation, we find some interesting differences of focus and exposition amongst the theorists who first developed the ‘geometric’ treatment of demand and supply, but find no reason, despite his differences from other marginalist pioneers such as Cournot, Dupuit and Walras, to consider Marshall’s treatment either as unconventional or forced, or as to regard him as the ‘odd man out’. Introduction In the standard textbooks, introductory discussions of demand and supply normally treat quantities demanded and supplied as functions of price (rather than vice versa), and complement that discussion with diagrams in the standard format, showing price on the vertical axis and quantities demanded and supplied on the horizontal axis. No references need be cited. Usually this presentation is accepted without comment, but it can happen that a more numerate student observes that something of an anomaly appears to exist – in that the diagrams show price, which, 1 Roy’s thanks go to Darryl Holden who raised the question about Marshall's diagrams, and for his subsequent advice, and to Eric Rahim, as always, for valuable comment. -
A Model of Bimetallism
Federal Reserve Bank of Minneapolis Research Department A Model of Bimetallism François R. Velde and Warren E. Weber Working Paper 588 August 1998 ABSTRACT Bimetallism has been the subject of considerable debate: Was it a viable monetary system? Was it a de- sirable system? In our model, the (exogenous and stochastic) amount of each metal can be split between monetary uses to satisfy a cash-in-advance constraint, and nonmonetary uses in which the stock of un- coined metal yields utility. The ratio of the monies in the cash-in-advance constraint is endogenous. Bi- metallism is feasible: we find a continuum of steady states (in the certainty case) indexed by the constant exchange rate of the monies; we also prove existence for a range of fixed exchange rates in the stochastic version. Bimetallism does not appear desirable on a welfare basis: among steady states, we prove that welfare under monometallism is higher than under any bimetallic equilibrium. We compute welfare and the variance of the price level under a variety of regimes (bimetallism, monometallism with and without trade money) and find that bimetallism can significantly stabilize the price level, depending on the covari- ance between the shocks to the supplies of metals. Keywords: bimetallism, monometallism, double standard, commodity money *Velde, Federal Reserve Bank of Chicago; Weber, Federal Reserve Bank of Minneapolis and University of Minne- sota. We thank without implicating Marc Flandreau, Ed Green, Angela Redish, and Tom Sargent. The views ex- pressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Chicago, the Fed- eral Reserve Bank of Minneapolis, or the Federal Reserve System. -
[ 543 ] V.—The Case for Bimetallism. by Joseph John Murphy. THE
1891.] [ 543 ] V.—The Case for Bimetallism. By Joseph John Murphy. [Read Tuesday, 14th April, 1891.] THE question which this essay is an attempt to answer, may be thus expressed :—What would be the effect on prices, and on the financial and industrial interests of the world in general, if the leading nations of the world were to agree to make both gold and silver unlimited legal tender at the ratio of value between the two that prevailed during the seventy years which closed with 1873 >— namely, 15-5- ozs. silver as in France, or 16 ozs. as in the United States, equal to one oz. of gold ;—at the same time opening their mints to the unlimited and gratuitous coinage of both metals 1 The statistical data used in the present attempt to answer this question, are taken from the " Final Report of the Royal Com- mission, appointed to enquire into the recent changes in the relative values of the precious metals, 1888." The reply to such a question must of necessity be somewhat in- definite. The laws of political economy are laws of tendency only, though they are mathematical in their certainty, and almost mathe- matical in their nature; yet, as in many branches of physical science, we can predict the general character and the direction of the effects of given causes, but not their magnitude. In a word, their cer- tainty does not ensure precision. Before endeavouring to reply to this question, much preliminary exposition will be required. We do not, however, propose to begin at the very beginning of the theory of money. -
Supply and Demand Is Not a Neoclassical Concern
Munich Personal RePEc Archive Supply and Demand Is Not a Neoclassical Concern Lima, Gerson P. Macroambiente 3 March 2015 Online at https://mpra.ub.uni-muenchen.de/63135/ MPRA Paper No. 63135, posted 21 Mar 2015 13:54 UTC Supply and Demand Is Not a Neoclassical Concern Gerson P. Lima1 The present treatise is an attempt to present a modern version of old doctrines with the aid of the new work, and with reference to the new problems, of our own age (Marshall, 1890, Preface to the First Edition). 1. Introduction Many people are convinced that the contemporaneous mainstream economics is not qualified to explaining what is going on, to tame financial markets, to avoid crises and to provide a concrete solution to the poor and deteriorating situation of a large portion of the world population. Many economists, students, newspapers and informed people are asking for and expecting a new economics, a real world economic science. “The Keynes- inspired building-blocks are there. But it is admittedly a long way to go before the whole construction is in place. But the sooner we are intellectually honest and ready to admit that modern neoclassical macroeconomics and its microfoundationalist programme has come to way’s end – the sooner we can redirect our aspirations to more fruitful endeavours” (Syll, 2014, p. 28). Accordingly, this paper demonstrates that current mainstream monetarist economics cannot be science and proposes new approaches to economic theory and econometric method that after replication and enhancement may be a starting point for the creation of the real world economic theory. -
The Ontology of Money and Other Economic Phenomena. Dan
Economic Reality: The Ontology of Money and Other Economic Phenomena. Dan Fitzpatrick PhD Thesis Department of Philosophy, Logic and Scientific Method London School of Economics. 1 UMI Number: U198904 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U198904 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 TH f , s*’- ^ h %U.Oi+. <9 Librw<V Brittsn utxwy Oi HouUco. J and Eoonowc Science m >Tiir I Abstract The contemporary academic disciplines of Philosophy and Economics by and large do not concern themselves with questions pertaining to the ontology of economic reality; by economic reality I mean the kinds of economic phenomena that people encounter on a daily basis, the central ones being economic transactions, money, prices, goods and services. Economic phenomena also include other aspects of economic reality such as economic agents, (including corporations, individual producers and consumers), commodity markets, banks, investments, jobs and production. My investigation of the ontology of economic phenomena begins with a critical examination of the accounts of theorists and philosophers from the past, including Plato, Aristotle, Locke, Berkeley, Hume, Marx, Simmel and Menger. -
FACTORS of SUPPLY & DEMAND Price Quantity Supplied
FACTORS OF SUPPLY & DEMAND Imagine that a student signed up for a video streaming subscription, a service that costs $9.00 a month to enjoy binge- worthy television and movies at any time of day. A few months into her subscription, she receives a notification that the monthly price will be increasing to $12.00 a month, which is over a 30 percent price increase! The student can either continue with her subscription at the higher price of $12.00 per month or cancel the subscription and use the $12.00 elsewhere. What should the student do? Perhaps she’s willing to pay $12.00 or more in order to access and enjoy the shows and movies that the streaming service provides, but will all other customers react in the same way? It is likely that some customers of the streaming service will cancel their subscription as a result of the increased price, while others are able and willing to pay the higher rate. The relationship between the price of goods or services and the quantity of goods or services purchased is the focus of today’s module. This module will explore the market forces that influence the price of raw, agricultural commodities. To understand what influences the price of commodities, it’s essential to understand a foundational principle of economics, the law of supply and demand. Understand the law of supply and demand. Supply is the quantity of a product that a seller is willing to sell at a given price. The law of supply states that, all else equal, an increase in price results in an increase in the quantity supplied. -
Macroeconomics: an Introduction the Demand for Money
Lecture Notes for Chapter 7 of Macroeconomics: An Introduction The Demand for Money Copyright © 1999-2008 by Charles R. Nelson 2/19/08 In this chapter we will discuss - What does ‘demand for money’ mean? Why do we need to know about it? What is the price of money? How the supply and demand for money determine the interest rate. The Fed controls the supply of money, so the Fed can control the interest rate. Why Study the Demand for Money? Fed controls the supply of money through open market operations. The demand for money depends on the interest rate. Interest rate is a price, and it adjusts to balance the supply and demand for money. That means the Fed can control interest rates by changing the supply of money. 1 Why are interest rates important? Low interest rates stimulate spending on - plant and equipment - and consumer durables. High interest rates discourage spending, - affect GDP and employment, - finally, prices and wages too. Control over interest rates gives the Fed a lever to move the economy. What is the Demand for Money? How much money would you like to have? - One billion? - Two? That can’t be it. Instead ‘How much money (currency and bank deposits) do you wish to hold, given your total wealth.’ Puzzle - Why hold any money at all? It pays no interest. It loses purchasing power to inflation. 2 Motives for holding money: 1. To settle transactions. - Money is the medium of exchange. 2. As a precautionary store of liquidity. - Money is the most liquid of all assets. -
International Bimetallism
STATEMENT RESPECTING THE WORK OF THE RECENT INTERNATIONAL BIMETALLIC COMh!ISSION HON.EDWARD 0.WOLCOTTa I I OF COLORADO, IN THE SENATE OF THE UNITED STATES, JANUARY 17, 1898. P WASHINGTON. 1898. r .C m: e* 4'~tatementRespecting the Work of the Recent Internationel Bimetallic Conkmission, BY I4UN. EDWAED 0. WOLGOTT, OF COLORADO, INTIIE SENATEOF TIIE UNITEDSTATES, Jaizunry 17, 1538. Mr. WOLCOTT s3id: Mr. PRESIDENT:In the statement which I am glad to make respecting certain phases of the work of the recent bimetallic com- mission. I must s-vealc, of course, entirely unoficiallv and as not committing my associates in the slightest degree &ither to my opinions or deductions. Later in the session we are certain to have ample discussion on the subject of silver, and it will proba- bly be acrid and bitter enough. In my remarks to-day, however, I mean to avoid, as far as possible, anything which may give rise to controversy, and while the account of our negotiations must necsssarily seem bare and colorless, the subject of them is one of surpassing interest and importance to every member of the Senate and to every citizen of our country. When Congress met a year ago, soon after the national election, there was a universal expression by the Republican membei-ship &nthe Senate that the pledge of the party in its St. Louis platform to promote international bimetallism by every aeans in its power was an undertaking to be faithfully carried out without evasion or delay. As a result of this sentiment, and growing out of the action of the Republican menibers of the Senate, I spent the monthsof Jan- uary and February last in London and Paris, with a day or two at Berlin, inquiring unofficially as to the apparent prospects of securing bimetallism by international agreement. -
Hindrances to the Acceptance of Bimetallism Author(S): R
Hindrances to the Acceptance of Bimetallism Author(s): R. H. Inglis Palgrave Source: The Economic Journal, Vol. 4, No. 13 (Mar., 1894), pp. 165-168 Published by: Wiley on behalf of the Royal Economic Society Stable URL: http://www.jstor.org/stable/2955888 Accessed: 28-06-2016 00:44 UTC Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://about.jstor.org/terms JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Royal Economic Society, Wiley are collaborating with JSTOR to digitize, preserve and extend access to The Economic Journal This content downloaded from 129.219.247.33 on Tue, 28 Jun 2016 00:44:14 UTC All use subject to http://about.jstor.org/terms HINDRANCES TO THE ACCEPTANCE OF BIMETALLISM 165 Now my contention was and is that, though there be a common cause it need not ' show itself in all or nearly all I the commodities quoted.' To take a new example, for which the data happen to be ready to hand; suppose that the average height of a regiment of 1,000 Italian recruits selected indiscriminately from all the provinces was returned as half an inch in excess of the average height of the whole army; one might infer with certainty that the difference was due to a real cause (as distinguished from chance); and that cause might well be ' single,' such as the circumstance that the men in the regiment were (contrary to the general practice) measured with their shoes on. -
The Work of Commodity Definition and Price Under Neoliberal Environmental Policy
University of Nebraska - Lincoln DigitalCommons@University of Nebraska - Lincoln U.S. Environmental Protection Agency Papers U.S. Environmental Protection Agency 2007 Discovering Price in All the Wrong Places: The Work of Commodity Definition and Price under Neoliberal Environmental Policy Morgan Robertson U.S. Environmental Protection Agency, [email protected] Follow this and additional works at: https://digitalcommons.unl.edu/usepapapers Robertson, Morgan, "Discovering Price in All the Wrong Places: The Work of Commodity Definition and Price under Neoliberal Environmental Policy" (2007). U.S. Environmental Protection Agency Papers. 150. https://digitalcommons.unl.edu/usepapapers/150 This Article is brought to you for free and open access by the U.S. Environmental Protection Agency at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in U.S. Environmental Protection Agency Papers by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. Discovering Price in All the Wrong Places: The Work of Commodity Definition and Price under Neoliberal Environmental Policy Morgan Robertson US Environmental Protection Agency, Office of Water, Wetlands Division, Washington, DC, USA; [email protected] Abstract: Price plays a unique role in neoliberal economic theory, quantifying value and pro- viding markets with the information needed to produce equilibrium conditions and optimal social welfare. While the role of price is clear, the mechanisms by which prices are discovered, and by which the commodities they value are defined, are left obscure in neoliberal theory. Automatic price discovery, and self-evident commodity identities, are assumed. Observation of newly created markets in ecosystem services suggests that this is a moment of significant ten- sion within neoliberal practice, as potential market participants seek guidance from the state on appropriate commodity measures and pricing practices. -
A Quantum Theory of Money and Value*
A quantum theory of money and value* David Orrell [email protected] Abstract The answer to the question ‘what is money?’ has changed throughout history. During the gold standard era, money was seen as gold or silver (the theory known as bullionism). In the early 20th century, the alternative theory known as chartalism proposed that money was a token chosen by the state for payment of taxes. Today, many economists take an agnostic line, and argue that money is best defined in terms of its function, e.g. as a neutral medium of exchange. This paper argues that none of these approaches adequately describe the nature of money, and proposes a new theory, inspired by non-Newtonian physics, which takes into account the dualistic real/virtual properties and complex nature of money. The theory is applied to the example of the emergence of cybercurrencies. Keywords: money, history, cybercurrencies 1. Introduction According to the definition used by most economists, money is anything that serves as a medium of exchange, a store of value, and a unit of account (Ragan & Lipsey, 2011, p. 609). But what special quality is it that gives money these properties? In other words, what makes money, money? Answers to the question are tied up with ideas about value, and have typically fallen into one of three camps. The first, known as metallism or bullionism, holds that the special ingredient is precious metal. Money should ideally be made of the stuff, or at least be backed by it. The second camp is chartalism (from the Latin charta for a record) which holds that coins and other money objects are just tokens, that the state agrees to accept as currency (Knapp, 1924, p. -
Nominality of Money: Theory of Credit Money and Chartalism Atsushi Naito
Review of Keynesian Studies Vol.2 Atsushi Naito Nominality of Money: Theory of Credit Money and Chartalism Atsushi Naito Abstract This paper focuses on the unit of account function of money that is emphasized by Keynes in his book A Treatise on Money (1930) and recently in post-Keynesian endogenous money theory and modern Chartalism, or in other words Modern Monetary Theory. These theories consider the nominality of money as an important characteristic because the unit of account and the corresponding money as a substance could be anything, and this aspect highlights the nominal nature of money; however, although these theories are closely associated, they are different. The three objectives of this paper are to investigate the nominality of money common to both the theories, examine the relationship and differences between the two theories with a focus on Chartalism, and elucidate the significance and policy implications of Chartalism. Keywords: Chartalism; Credit Money; Nominality of Money; Keynes JEL Classification Number: B22; B52; E42; E52; E62 122 Review of Keynesian Studies Vol.2 Atsushi Naito I. Introduction Recent years have seen the development of Modern Monetary Theory or Chartalism and it now holds a certain prestige in the field. This theory primarily deals with state money or fiat money; however, in Post Keynesian economics, the endogenous money theory and theory of monetary circuit place the stress on bank money or credit money. Although Chartalism and the theory of credit money are clearly opposed to each other, there exists another axis of conflict in the field of monetary theory. According to the textbooks, this axis concerns the functions of money, such as means of exchange, means of account, and store of value.