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The Nominal System : Linkage to the Quantity of Money or to Nominal Income

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  • Benjamin Eden

Abstract

[eng] The nominal system : linkage to the quantity of money or to nominal income. . Under stable money supply, economic agents wish to employ money as a unit of account in future contracts ; we should therefore try to preserve the functions of nominal contracts in the presence of monetary disturbances. Thus it is erratic changes in monetary policy that should be neutralized (by means of linkage to the quantity of money or nominal incarne) rather than random changes in the rate of inflation (by means of indexation). [fre] Quand l'offre de monnaie est stable, les agents économiques veulent employer la monnaie comme unité de compte dans leurs contrats futurs ; par conséquent, H faudrait, quand il se produit des perturbations monétaires, préserver les contrats émis en termes nominaux. C'est pourquoi ce sont les changements irréguliers de la politique monétaire qui devraient être neurtalisés (par une sorte de liaison au stock de monnaie ou au revenu national) plutôt que les changements aléatoires du taux d'inflation (par le moyen de l'indexation).

Suggested Citation

  • Benjamin Eden, 1979. "The Nominal System : Linkage to the Quantity of Money or to Nominal Income," Revue Économique, Programme National Persée, vol. 30(1), pages 121-143.
  • Handle: RePEc:prs:reveco:reco_0035-2764_1979_num_30_1_408452
    Note: DOI:10.3406/reco.1979.408452
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    References listed on IDEAS

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    1. Joseph E. Stiglitz, 1974. "Incentives and Risk Sharing in Sharecropping," Review of Economic Studies, Oxford University Press, vol. 41(2), pages 219-255.
    2. Gray, Jo Anna, 1976. "Wage indexation: A macroeconomic approach," Journal of Monetary Economics, Elsevier, vol. 2(2), pages 221-235, April.
    3. Barro, Robert J, 1977. "Unanticipated Money Growth and Unemployment in the United States," American Economic Review, American Economic Association, vol. 67(2), pages 101-115, March.
    4. K. J. Arrow, 1964. "The Role of Securities in the Optimal Allocation of Risk-bearing," Review of Economic Studies, Oxford University Press, vol. 31(2), pages 91-96.
    5. Shavell, Steven, 1976. "Sharing Risks of Deferred Payment," Journal of Political Economy, University of Chicago Press, vol. 84(1), pages 161-168, February.
    6. Martin Neil Baily, 1974. "Wages and Employment under Uncertain Demand," Review of Economic Studies, Oxford University Press, vol. 41(1), pages 37-50.
    7. Azariadis, Costas, 1975. "Implicit Contracts and Underemployment Equilibria," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1183-1202, December.
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    Cited by:

    1. Aizenman, Joshua & Frenkel, Jacob A, 1986. "Supply Shocks, Wage Indexation and Monetary Accommodation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(3), pages 304-322, August.
    2. Benjamin Eden, 1981. "Competitive Price Adjustment and Linkage to the Money Supply," UCLA Economics Working Papers 203, UCLA Department of Economics.
    3. Leland B. Yeger, 1986. "The Significance of Monetary Disequilibrium," Cato Journal, Cato Journal, Cato Institute, vol. 6(2), pages 369-420, Fall.
    4. Axel Leijonhufvud, 1983. "Rational Expectations and Monetary Institutions," UCLA Economics Working Papers 302, UCLA Department of Economics.

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