publication . Preprint . 2014

The liquidity preference theory: a critical analysis

Giancarlo Bertocco; Andrea Kalajzic;
Open Access
  • Published: 01 Jan 2014
Abstract
Keynes in the General Theory, explains the monetary nature of the interest rate by means of the liquidity preference theory. The objective of this paper is twofold. First, to point out the limits of the liquidity preference theory. Second, to present an explanation of the monetary nature of the interest rate based on the arguments with which Keynes responded to the criticism levelled at the liquidity preference theory by supporters of the loanable funds theory such as Ohlin and Robertson. It is shown that this explanation is consistent with the definition of the non-neutrality of money that Keynes presented in his 1933 works in which he underlines the need to el...
Related Organizations
36 references, page 1 of 3

Bank of England, The Monetary Policy Committee, 1999. The transmission mechanism of monetary policy.

Bertocco, G. 2005. The role of credit in a Keynesian monetary economy, Review of Political Economy, vol. 17, 4, 489-512.

Bertocco, G. 2007. The characteristics of a monetary economy: a Keynes-Schumpeter approach, Cambridge Journal of Economics, vol. 31, 1, pp.101-122.

Bertocco, G. 2009 The economics of financing firms: two different approaches, History of Economic Ideas, vol. XVII, 1, pp.85-123.

Bertocco, G. 2010., The endogenous money theory and the characteristics of a monetary economy, Rivista Italiana degli Economisti, vol. XV, 3, pp.365-401. [OpenAIRE]

Bindseil, U. 2004. Monetary Policy Implementation. Oxford, Oxford University Press. [OpenAIRE]

Davidson, P. 1994. Post Keynesian Macroeconomic Theory, Aldershot, Edward Elgar.

Docherty, P. 2011. Keynes's analysis of economic crises and monetary policy in the General Theory: its relevance after 75 years, Review of Political Economy, vol. 23, 4, pp. 521-535.

Fontana, G. 2006. Keynesian uncertainty and money, in: Arestis, P. and Sawyer, M. (eds.): A Handbook of Alternative Monetary Economics. Cheltenham, Edward Elgar.

Fontana, G. 2009. Money, Uncertainty and Time. London, Routledge.

Fullwiler, S. 2006. Setting interest rates in the modern era, Journal of Post Keynesian Economics, spring, vol. 28, 3, pp.495-525. [OpenAIRE]

Goodwin, R. 1993. Schumpeter and Keynes, in: Biasco S., Roncaglia A., Salvati M. (eds.): Markets and Institutions in Economic Development, London, Macmillan Press (pp. 83-86).

Gnos, C. 2004. Is ex-ante, ex-post analysis irrelevant to Keynes's theory of employment?, Review of Political Economy, vol. 16, 3, pp. 335-345.

Keynes, J.M. 1973a (1933a). A monetary theory of production, in: J.M. Keynes, The Collected Writings, London, Macmillan Press, vol. XIII, 408-411

Keynes, J. M. 1973b (1933b). The distinction between a co-operative economy and an entrepreneur economy, in: J.M. Keynes, The Collected Writings, Macmillan, London, vol. XXIX, pp.76- 106.

36 references, page 1 of 3
Powered by OpenAIRE Research Graph
Any information missing or wrong?Report an Issue