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David Hume and Irving Fisher on the quantity theory of money in the long run and the short run


  • Robert W. Dimand


David Hume's classic statement of the quantity theory of money and the specie-flow mechanism of international adjustment in 1752 and Irving Fisher's authoritative restatement of the quantity theory in 1911 shared a concern with simultaneously upholding both the long-run neutrality and the short-run non-neutrality of money. This paper compares their approaches to attempting this reconciliation of the long run and short run, noting their shared emphasis on ‘illusion’ as the basis of short-run non-neutrality, and places their contributions in historical context. I argue that Hume and Fisher shared the same view of how automatic adjustment of the balance of payments worked under the gold standard, with Fisher's monetary reform proposals being an attempt to prevent the working of Hume's automatic adjustment mechanism.

Suggested Citation

  • Robert W. Dimand, 2013. "David Hume and Irving Fisher on the quantity theory of money in the long run and the short run," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 20(2), pages 284-304, April.
  • Handle: RePEc:taf:eujhet:v:20:y:2013:i:2:p:284-304
    DOI: 10.1080/09672567.2012.758760

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    1. repec:ucp:bkecon:9780226519999 is not listed on IDEAS
    2. Arnon,Arie, 2011. "Monetary Theory and Policy from Hume and Smith to Wicksell," Cambridge Books, Cambridge University Press, number 9780521191135.
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