 Real Analysis in Classical, Neoclassical, Neoclassical Synthesis, Monetarist, New Classical, New Keynesian, and New Consensus TheoriesChapter 3 in Money, Distribution Conflict and Capital Accumulation, 2008, pp 9-12 from Palgrave Macmillan Abstract: Abstract Classical orthodoxy since David Ricardo, Lord Overstone and Robert Torrens has assumed the long-run neutrality of money applying the quantity theory of money as proposed by David Hume. In the long run, when prices have adjusted to their equilibrium values, there is a proportional relationship between the quantity of money supplied and the level of prices, assuming that money does not consist of commodity money but of token (paper) money.2 In the short run, however, with fixed prices and given expectations, a change in the quantity of money supply affects output and employment. Therefore, the classical dichotomy between the real and the monetary sphere is a phenomenon of the long run. The neutrality hypothesis with respect to the effects of monetary policy is further on only related to real quantities. The existence and the use of money as a means of circulation are generally assumed to qualitatively improve the allocation efficiency of a market system by means of reducing transaction and information costs. Keywords: Monetary Policy; Central Bank; Money Supply; Real Interest Rate; Phillips Curve (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-59560-6_3 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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