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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 moneys 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, vol. 77(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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    6. 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. Crump, Richard K. & Eusepi, Stefano & Giannoni, Marc & Sahin, Aysegul, 2019. "A Unified Approach to Measuring u," CEPR Discussion Papers 13939, C.E.P.R. Discussion Papers.
    2. 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.
    3. 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.
    4. 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, vol. 93(Sum), pages 201-227.

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