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Ricardo's monetary policy and the currency principle


  • Sylvie DIATKINE



We show that David Ricardo's proposals from 1816 to 1823 for reforming the British monetary and banking system aim at defining a specific monetary policy which in rather important points is different from the one that will be implemented in 1844, the latter following the Currency School recommendations. According to Ricardo, currency only composed of banknotes convertible into bullion, should be issued by the State, that is to say a "national public bank", independent from the government but which neither lends nor behaves as a central bank. It is only responsible for the stability of the value of paper money through its intervening on the gold market. It is subject to price rules and not quantity rules or reserve requirements and this is why it can pursue an active policy which permits a flexible supply of money through an open market policy.

Suggested Citation

  • Sylvie DIATKINE, 2008. "Ricardo's monetary policy and the currency principle," Cahiers d’économie politique / Papers in Political Economy, L'Harmattan, issue 55, pages 35-48, July - De.
  • Handle: RePEc:cpo:journl:y:2008:i:55:p:35-48

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    References listed on IDEAS

    1. Olivier Godard, 1990. "Environnement, modes de coordination et systèmes de légitimité : analyse de la catégorie de patrimoine naturel," Revue Économique, Programme National Persée, vol. 41(2), pages 215-242.
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    3. Thierry Hommel & Olivier Godard, 2002. "Trajectoire de contestabilité sociale et production d'OGM à usage agricole," Économie rurale, Programme National Persée, vol. 270(1), pages 36-49.
    4. Driessen, Peter P. J. & Glasbergen, Pieter & Verdaas, Co, 2001. "Interactive policy-making - a model of management for public works," European Journal of Operational Research, Elsevier, vol. 128(2), pages 322-337, January.
    5. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    6. Jean-Charles Hourcade & Emeric Fortin, 2000. "Impact economique des politiques climatiques : des controverses aux enjeux de coordination," Economie Internationale, CEPII research center, issue 82, pages 45-74.
    7. Olivier Barreteau, 2003. "The Joint Use of Role-Playing Games and Models Regarding Negotiation Processes: Characterization of Associations," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 6(2), pages 1-3.
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    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies


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