A Technical Definition of Uncertainty and the Long-run Non-neutrality of Money

Paul Davidson

Chapter 15 in Inflation, Open Economies and Resources, 1991, pp 159-170 from Palgrave Macmillan

Abstract: Abstract Ever since Knight’s (1921) seminal work, some economists have drawn a distinction between uncertainty and risk — in order to demonstrate that this difference has important implications for understanding the operations of an entrepreneurial economy. Lawson (1985) is the latest to discuss the need for the analysis of ‘societal interaction’1 in an economic world where ‘[uncertainty, as opposed to mathematical risk, is a pervasive fact of life’ (p. 909). Lawson correctly associates the concept of uncertainty with the situation where there is no basis whatever upon which to form any calculable probability … Uncertainty in this account arises when the probability relation is numerically indeterminate and non-comparable to other probability relations (1985, p. 914).

Keywords: Liquid Asset; Uncertain Future; Stationary Stochastic Process; Forward Contract; Monetary Theory (search for similar items in EconPapers)
Date: 1991
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Journal Article: A Technical Definition of Uncertainty and the Long-run Non-neutrality of Money (1988)
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DOI: 10.1007/978-1-349-11516-7_15

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