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Money as mumeraire: doctrinal aspects and contemporary relevance

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  • Joseph Aschheim

    (The George Washington University, Washington (USA))

  • George S. Tavlas

    ()
    (Bank of Greece, Economie Research Department, Athens (Greece))

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    Abstract

    At the beginning of the twentieth century, most economists took it for granted that the primary function of money is its role as a medium of exchange and that moneyshould consist of, or be backed by, gold, or silver, or both. This paper discusses three writers--Alexander Del Mar, Georg Knapp, and John Maynard Keynes--who took a different tack. By endeavouring to explain what money is, they focused on the capacity of money to have value. In so doing, they gave primacy to the unit-of-account function of money and originated the theory of chartalism. We show that the primacy placed on the numeraire by those writers provides insights into present-day analyses of general equilibrium, neutral money, business cycles, and currency-area formation.

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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9873/9755
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    Bibliographic Info

    Article provided by Banca Nazionale del Lavoro in its journal BNL Quarterly Review.

    Volume (Year): 59 (2006)
    Issue (Month): 239 ()
    Pages: 333-361

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    Handle: RePEc:psl:bnlaqr:2006:42

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    Keywords: Money;

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    References

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    1. Brunner, Karl & Meltzer, Allan H, 1971. "The Uses of Money: Money in the Theory of an Exchange Economy," American Economic Review, American Economic Association, vol. 61(5), pages 784-805, December.
    2. Engel, C. & Rogers, J.H., 1995. "How Wide is the Border?," Papers 4-95-16, Pennsylvania State - Department of Economics.
    3. James Tobin, 1985. "Neoclassical Theory in America: J.B. Clark and Fisher," Cowles Foundation Discussion Papers 776, Cowles Foundation for Research in Economics, Yale University.
    4. Richard Pomfret, 2005. "Currency Areas in Theory and Practice," The Economic Record, The Economic Society of Australia, vol. 81(253), pages 166-176, 06.
    5. Milton Friedman & Anna J. Schwartz, 1987. "Has Government Any Role in Money?," NBER Chapters, in: Money in Historical Perspective, pages 289-314 National Bureau of Economic Research, Inc.
    6. Harris Dellas & George Tavlas, 2002. "Wage Rigidity and Monetary Union," Diskussionsschriften dp0219, Universitaet Bern, Departement Volkswirtschaft.
    7. Mankiw, N Gregory, 2001. "The Inexorable and Mysterious Tradeoff between Inflation and Unemployment," Economic Journal, Royal Economic Society, vol. 111(471), pages C45-61, May.
    8. Klein, Lawrence R., 2004. "Comment on academic exclusion: the case of Alexander Del Mar," European Journal of Political Economy, Elsevier, vol. 20(1), pages 69-71, March.
    9. Aschheim, Joseph & Tavlas, George S., 2004. "Academic exclusion: the case of Alexander Del Mar," European Journal of Political Economy, Elsevier, vol. 20(1), pages 31-60, March.
    10. Aschheim, Joseph & Tavlas, George S, 1996. "Monetary Economics in Doctrinal Perspective: Review Essay," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(3), pages 406-17, August.
    11. P. Swamy & George Tavlas, 2007. "The New Keynesian Phillips Curve and Inflation Expectations: Re-Specification and Interpretation," Economic Theory, Springer, vol. 31(2), pages 293-306, May.
    12. Mundell, Robert, 2004. "Comment on academic exclusion: the case of Alexander Del Mar," European Journal of Political Economy, Elsevier, vol. 20(1), pages 61-68, March.
    13. Lucas, Robert E, Jr, 1980. "Methods and Problems in Business Cycle Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(4), pages 696-715, November.
    14. Charles Goodhart, 1989. "Money, Information and Uncertainty: 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262071223, December.
    15. Carl E. Walsh, 2003. "Monetary Theory and Policy, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232316, December.
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    Cited by:
    1. Joseph Aschheim & George S. Tavlas, 2007. "Unit of account or medium of exchange? Reply," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 60(241), pages 207-213.
    2. Leland Yeager, 2007. "Unit of account or medium of exchange?," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 60(241), pages 195-205.
    3. Joseph Aschheim & George S. Tavlas, 2007. "Unit of account or medium of exchange? Reply," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 60(241), pages 207-213.
    4. Leland Yeager, 2007. "Unit of account or medium of exchange?," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 60(241), pages 195-205.

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