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The Wicksell Connection, The Quantity Theory and Keynes

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Abstract

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, David, 1997. "The Wicksell Connection, The Quantity Theory and Keynes," University of Western Ontario, Departmental Research Report Series 9708, University of Western Ontario, Department of Economics.
    • Handle: RePEc:uwo:uwowop:9708
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    File URL: https://ir.lib.uwo.ca/cgi/viewcontent.cgi?article=1424&context=economicsresrpt
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    Cited by:

    1. Mehak Moazam & M. Ali Kemal, 2016. "Inflation in Pakistan: Money or Oil Prices," Working Papers id:11507, eSocialSciences.
    2. 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

    Keywords

    BUSINESS CYCLES; INTEREST RATE;

    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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