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The Wicksell Connection, The Quantity Theory and Keynes


  • Laidler, D.


In the business cycle literature of the inter-war years, the role of the interest rate in coordinating, or failing to co-ordinate, agents' choices about the allocation of resources over time was an important theme, to which Axel Leijonhufvud (1981) gave the name "the Wicksell connection". The theme takes on particular importance in an economy in which such co-ordination failure produces output fluctuations, because it may involve a fundamental inability on the part of market mechanisms to induce the price responses needed to restore full employment once the economy is moved away from it.

Suggested Citation

  • Laidler, D., 1997. "The Wicksell Connection, The Quantity Theory and Keynes," UWO Department of Economics Working Papers 9708, University of Western Ontario, Department of Economics.
  • Handle: RePEc:uwo:uwowop:9708

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    References listed on IDEAS

    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
    2. Becker, Gary S & Tomes, Nigel, 1976. "Child Endowments and the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 143-162, August.
    3. James Heckman & Anne Layne-Farrar & Petra Todd, 1995. "Does Measured School Quality Really Matter? An Examination of the Earnings-Quality Relationship," NBER Working Papers 5274, National Bureau of Economic Research, Inc.
    4. Behrman, Jere R & Rosenzweig, Mark R & Taubman, Paul, 1996. "College Choice and Wages: Estimates Using Data on Female Twins," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 672-685, November.
    5. Ritchie H. Reed & Herman P. Miller, 1970. "Some Determinants of the Variation in Earnings for College Men," Journal of Human Resources, University of Wisconsin Press, vol. 5(2), pages 177-19.
    6. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
    7. Loury, Linda Datcher & Garman, David, 1995. "College Selectivity and Earnings," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 289-308, April.
    8. James, Estelle, et al, 1989. "College Quality and Future Earnings: Where Should You Send Your Child to College?," American Economic Review, American Economic Association, vol. 79(2), pages 247-252, May.
    9. Hanushek, Eric A, 1986. "The Economics of Schooling: Production and Efficiency in Public Schools," Journal of Economic Literature, American Economic Association, vol. 24(3), pages 1141-1177, September.
    10. Joseph G. Altonji & Thomas A. Dunn, 1995. "The Effects of School and Family Characteristics on the Return to Education," NBER Working Papers 5072, National Bureau of Economic Research, Inc.
    11. Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
    12. Kermit Daniel & Dan Black & Jeffery Smith, 1996. "College Quality and the Wages of Young Men," HEW 9604001, EconWPA.
    13. Koenker, Roger, 1981. "A note on studentizing a test for heteroscedasticity," Journal of Econometrics, Elsevier, vol. 17(1), pages 107-112, September.
    14. Terence J. Wales, 1973. "The Effect of College Quality on Earnings: Results from the N B E R-Thorndike Data," Journal of Human Resources, University of Wisconsin Press, vol. 8(3), pages 306-317.
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    Cited by:

    1. Mehak Moazam & M. Ali Kemal, 2016. "Inflation in Pakistan: Money or Oil Prices," PIDE-Working Papers 2016:144, Pakistan Institute of Development Economics.
    2. Mehak Moazam & M. Ali Kemal, 2016. "Inflation in Pakistan: Money or Oil Prices," Working Papers id:11507, eSocialSciences.
    3. Siven, Claes-Henric, 2000. "Analytical Foundations of Erik Lindahl's Monetary Analysis, 1924-30," Research Papers in Economics 2000:14, Stockholm University, Department of Economics.

    More about this item



    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects


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