Clarification of the Excess Demand for or Excess Supply of Money

Alan A Rabin

Economic Inquiry, 1993, vol. 31, issue 3, 448-55

Abstract: One of the most misunderstood and neglected concepts in all of economics is the notion that money may be in excess supply or excess demand. The article presents several reasons why monetary disequilibrium would indeed persist, including the fact that no 'money market' exists with a single price that would clear that market. Contrary to the claims of several leading textbooks, the article explains why changes in the interest rate would not immediately eliminate an excess supply of or demand for money. Copyright 1993 by Oxford University Press.

Date: 1993
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