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Liquidity preference: the new international financial arrangements invalidate the theory?

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  • Adriana Moreira Amado

Abstract

The paper analyses a question that is very frequent in the academic debate among different schools of thought: the relevance of the liquidity preference theory under the new international and national financial arrangements. The main issue here is to point out that those new arrangements gave too much liquidity to non-monetary financial assets that made irrelevant the liquidity attribute of money; therefore, liquidity preference loses its meaning. The paper demonstrates that under Keynes assumptions, which support liquidity preference theory, this new arrangements emphasises and strengthens several motives for demanding money and not the contrary, reinforcing in this way the validity of the theory. JEL Classification: B50; E12; E41.

Suggested Citation

  • Adriana Moreira Amado, 2004. "Liquidity preference: the new international financial arrangements invalidate the theory?," Brazilian Journal of Political Economy, Center of Political Economy, vol. 24(4), pages 501-515.
    • Handle: RePEc:ekm:repojs:v:24:y:2004:i:4:p:501-515:id:761
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    More about this item

    Keywords

    Globalization; liquidity preference; Keynes;
    All these keywords.

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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