Keynes’s approach to money: an assessment after 70 years
DOI:
https://doi.org/10.5380/re.v32i2.7727Keywords:
Keynes, economia keynesiana, moeda, preferência pela liquidez, Keynesian economics, money, liquidity preferenceAbstract
This paper first examines two approaches to money adopted by
Keynes in the General Theory (GT). The first is the more familiar “supply and demand” equilibrium approach of Chapter 13, incorporated within conventional macroeconomics in both the ISLM version as well as Friedman’s monetarism. Indeed, even Post Keynesians utilizing Keynes’s “finance motive” or the “horizontal” money supply curve adopt similar methodology. The second approach of the GT is presented in Chapter 17, where Keynes drops “money supply and demand” in favor of a liquidity preference approach to asset prices. The Chapter 17 approach offers a much more satisfactory treatment of the fundamental role played by money to constrain effective demand in the capitalist economy. In the next section, I return to Keynes’s earlier work, namely the Treatise on Money (TOM), as well as the early drafts of the GT, to obtain a better understanding of Keynes’s views on the nature of money.
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