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Keynes's theory of liquidity preference and his debt management and monetary policies

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  • Geoff Tily

Abstract

This paper seeks to bolster the view that Keynes was a monetary economist concerned primarily with monetary and not fiscal policy. His most fundamental policy conclusion for national economies was that the authorities could control the long-term rate of interest and should do so to promote investment, growth and employment. Keynes's theory of liquidity preference is presented as a theory of money as a store of value that leads to this fundamental policy conclusion. The theory is then applied to explain the debt management, monetary and international financial policies that were adopted in World War II. Copyright 2006, Oxford University Press.

Suggested Citation

  • Geoff Tily, 2006. "Keynes's theory of liquidity preference and his debt management and monetary policies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 30(5), pages 657-670, September.
    • Handle: RePEc:oup:cambje:v:30:y:2006:i:5:p:657-670
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    File URL: http://hdl.handle.net/10.1093/cje/bei104
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    Cited by:

    1. Alcino F. Camara-Neto & Matías Vernengo, 2012. "Keynes after Sraffa and Kaldor: Effective Demand, Accumulation and Productivity Growth," Chapters, in: Thomas Cate (ed.), Keynes’s General Theory, chapter 10, Edward Elgar Publishing.
    2. Angel Asensio, 2009. "Between the cup and the lip," Working Papers halshs-00496911, HAL.
    3. Jörg Bibow, 2018. "Unconventional monetary policies and central bank profits," IMK Studies 62-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Rivot, Sylvie, 2021. "Reading Keynes’s policy papers through the prism of his Treatise on Probability: information, expectations and revision of probabilities in economic policy," OSF Preprints s5qp9, Center for Open Science.
    5. Asensio, Angel & Charles, Sébastien & Lang, Dany & Le Heron, Edwin, 2011. "Les développements récents de la macroéconomie post-keynésienne," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 10.
    6. Angel Asensio, 2010. "Macroeconomic trouble and policy challenges in the wake of the financial bust," Working Papers halshs-00496921, HAL.
    7. Angel Asensio, 2012. "Between the Cup and the Lip: On Post Keynesian Interest Rate Rules and Long-term Interest Rate Management," Chapters, in: Louis-Philippe Rochon & Salewa ‘Yinka Olawoye (ed.), Monetary Policy and Central Banking, chapter 1, Edward Elgar Publishing.
    8. Sylvie Rivot, 2015. "Rule-based frameworks in historical perspective: Keynes' and Friedman's monetary policies versus contemporary policy-rules," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 22(4), pages 601-633, August.
    9. Angel Asensio, 2009. "Bad money and distributive conflict," Working Papers halshs-00496919, HAL.
    10. Biagio Bossone, 2021. "Exercising Economic Sovereignty in Today's Global Financial World: The Lessons from John Maynard Keynes," Working Papers PKWP2120, Post Keynesian Economics Society (PKES).
    11. Angel Asensio & Sébastien Charles & Edwin Le Héron & Dany Lang, 2011. "Recent developments in Post-Keynesian modeling [Los desarrollos recientes de la macroeconomía post-keynesiana]," Post-Print halshs-00664867, HAL.
    12. Angel Asensio, 2008. "(Post) Keynesian alternative to inflation targeting," Post-Print halshs-00335560, HAL.
    13. Gabe de Bondt, 2017. "Confidence and monetary policy transmission," EcoMod2017 10197, EcoMod.
    14. Joerg Bibow, 2018. "Unconventional Monetary Policies and Central Bank Profits: Seigniorage as Fiscal Revenue in the Aftermath of the Global Financial Crisis," Economics Working Paper Archive wp_916, Levy Economics Institute.

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