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Nonneutrality of money in classical monetary thought

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  • Thomas M. Humphrey

Abstract

Contrary to the strawman “classical” model of the textbooks, the original classical economists did not believe that money-stock changes affect only the price level and not real output and employment. Most classicals saw money as having powerful short-run real effects and perhaps some residual long-run effects as well. Concern for money’s impact on real activity strongly influenced the classicals’ views of the desirability or undesirability of monetary expansion and contraction.

Suggested Citation

  • Thomas M. Humphrey, 1991. "Nonneutrality of money in classical monetary thought," Economic Review, Federal Reserve Bank of Richmond, issue Mar, pages 3-15.
  • Handle: RePEc:fip:fedrer:y:1991:i:mar:p:3-15:n:v.77no.2
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    References listed on IDEAS

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    1. Niehans, Jurg, 1987. "Classical Monetary Theory, New and Old," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 19(4), pages 409-424, November.
    2. Frank Whitson Fetter, 1942. "The Life and Writings of John Wheatley," Journal of Political Economy, University of Chicago Press, vol. 50, pages 357-357.
    3. Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
    4. M. A. Hudson, 1965. "Ricardo On Forced Saving," The Economic Record, The Economic Society of Australia, vol. 41(94), pages 240-247, June.
    5. Glasner,David, 1989. "Free Banking and Monetary Reform," Cambridge Books, Cambridge University Press, number 9780521361750, March.
    6. Papademos, Lucas & Modigliani, Franco, 1990. "The supply of money and the control of nominal income," Handbook of Monetary Economics,in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 1, chapter 10, pages 399-399 Elsevier.
    7. F. A von Hayek, 1932. "A Note on the Development of the Doctrine of "Forced Saving"," The Quarterly Journal of Economics, Oxford University Press, vol. 47(1), pages 123-133.
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    Cited by:

    1. Gilles Jacoud, 1994. "Stabilité monétaire et régulation étatique dans l'analyse de Léon Walras," Revue Économique, Programme National Persée, vol. 45(2), pages 257-288.
    2. Moosa, Imad A., 1997. "Testing the long-run neutrality of money in a developing economy: the case of India," Journal of Development Economics, Elsevier, vol. 53(1), pages 139-155, June.
    3. Jeffrey M. Lacker & John A. Weinberg, 2007. "Inflation and unemployment: a layperson's guide to the Phillips curve," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 201-227.

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    Keywords

    Money theory ; Economists ; Economic history;

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