Essentiality of Money: A Historical Perspective

Bruno Sultanum

Richmond Fed Economic Brief, 2024, vol. 24, issue 01

Abstract: In this article, I explore the historical development of the concept of essentiality of money, as well as monetary theory more broadly. I begin by introducing the concept of money and its role in facilitating economic activity. I delve into the evolution of monetary theory, starting with the classical theory and the marginal revolution and moving to the division between microeconomics and macroeconomics. Then I discuss the microfoundation revolution in macroeconomics and the debate over the essentiality of money. Finally, I examine the New Keynesian School (which uses reduced-form tools to introduce money) and the New Monetarist School (which emphasizes explicit microfoundations and the essential functions of money).

Keywords: financial institutions; Financial regulation; Money (search for similar items in EconPapers)
Date: 2024
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