IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

New Trade Theory Takes Over Monetary Theory

  • M Gani

    (Economic Science Institute, Dhaka, Bangladesh.)

Prevailing trade theory is a neglected stepchild of economics. Micro rejects the sole reason for trade’s occurrence. It declares zero profit in equilibrium. Monetary theory and macroeconomics dismiss concerns of trade financing. They assert that money has nothing to do with traded output, but everything to do with storing value. But now a new trade theory takes over monetary theory, by reducing money into a mere tool of trade, as just a means of payment. It takes over theory of exchange, abolishing any distinction between micro and macro. Finally, all of economics becomes a study of exchange, what Whately wished in 1832. This magical empowerment of trade theory occurs as we add indirect trade formally. We put it in the familiar input-output table. We consider demand and supply at four levels: for each good, for each transaction, for each household/nation, and for each economy. At each level, something different happens in equilibrium. We employ intermediaries to settle prices through arbitrage, and payments through seigniorage (by creating and issuing money). Suddenly economics studies economy rather than human behavior. The market economy is an institution of exchange, which is a matrix of real output. All economics now belongs to trade.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://128.118.178.162/eps/it/papers/0405/0405005.pdf
Download Restriction: no

Paper provided by EconWPA in its series International Trade with number 0405005.

as
in new window

Length: 34 pages
Date of creation: 18 May 2004
Date of revision:
Handle: RePEc:wpa:wuwpit:0405005
Note: Type of Document - pdf; pages: 34. Whately's 1832 dream comes true as economics becomes science of exchange. Misesian message is put in Leontief's table. Monetary theory is changed at its root.
Contact details of provider: Web page: http://128.118.178.162

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Ostroy, Joseph M. & Starr, Ross M., 1990. "The transactions role of money," Handbook of Monetary Economics, in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 1, chapter 1, pages 3-62 Elsevier.
  2. Debreu, Gerard, 1991. "The Mathematization of Economic Theory," American Economic Review, American Economic Association, vol. 81(1), pages 1-7, March.
  3. Leamer, Edward E, 1980. "The Leontief Paradox, Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 495-503, June.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpit:0405005. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.