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Comment

In: Value and Capital: Fifty Years Later

Author

Listed:
  • Carlo Casarosa

    (University of Pisa)

Abstract

Professor Gale’s paper deals with the theory of liquidity preference and interest rates formulated by Hicks in Value and Capital. The main aim of the paper is not to present an interpretation of Hicks’s thinking, but to re-examine, in the context of the modern theory of asset-pricing, some of the problems raised in Part III of Value and Capital. However, Gale points out from the start that, while Hicks’s analysis has been generally viewed as a theory of the term structure of interest rates, there are elements which make it particularly relevant to the problem of allocation of real resources in incomplete markets. Actually, according to Gale, the most important aspect of liquidity preference is that it may cause underinvestment in long- lived capital goods.

Suggested Citation

  • Carlo Casarosa, 1991. "Comment," International Economic Association Series, in: Lionel W. McKenzie & Stefano Zamagni (ed.), Value and Capital: Fifty Years Later, pages 171-176, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-349-11029-2_11
    DOI: 10.1007/978-1-349-11029-2_11
    as

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