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Money as mumeraire: doctrinal aspects and contemporary relevance

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Listed:
  • Joseph Aschheim

    (The George Washington University, Washington (USA))

  • George S. Tavlas

    (Bank of Greece, Economie Research Department, Athens (Greece))

Abstract

At the beginning of the twentieth century, most economists took it for granted that the primary function of money is its role as a medium of exchange and that moneyshould consist of, or be backed by, gold, or silver, or both. This paper discusses three writers--Alexander Del Mar, Georg Knapp, and John Maynard Keynes--who took a different tack. By endeavouring to explain what money is, they focused on the capacity of money to have value. In so doing, they gave primacy to the unit-of-account function of money and originated the theory of chartalism. We show that the primacy placed on the numeraire by those writers provides insights into present-day analyses of general equilibrium, neutral money, business cycles, and currency-area formation.

Suggested Citation

  • Joseph Aschheim & George S. Tavlas, 2006. "Money as mumeraire: doctrinal aspects and contemporary relevance," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 59(239), pages 333-361.
    • Handle: RePEc:psl:bnlqrr:2006:42
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9873/9755
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    References listed on IDEAS

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    Cited by:

    1. Leland Yeager, 2007. "Unit of account or medium of exchange?," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 60(241), pages 195-205.
    2. Joseph Aschheim & George S. Tavlas, 2007. "Unit of account or medium of exchange? Reply," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 60(241), pages 207-213.
    3. Leland Yeager, 2007. "Unit of account or medium of exchange?," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 60(241), pages 195-205.

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    Keywords

    Money;

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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