Monetarist, Keynesian and Quantity Theories

Mel ze , Allan H. A icle Mone a is , Keynesian and Quan i y Theo ies K edi und Kapi al P o ided in Coope a ion wi h: Duncke & Humblo , Be lin Sugges ed Ci a ion: Mel ze , Allan H. (1977) : Mone a is , Keynesian and Quan i y Theo ies, K edi und Kapi al, ISSN 0023-4591, Duncke & Humblo , Be lin, Vol. 10, Iss. 2, pp. 149-182, h ps://doi.o g/10.3790/ccm.10.2.149 This Ve sion is a ailable a : h ps://hdl.handle.ne /10419/292787 S anda d-Nu zungsbedingungen: Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen Zwecken und zum P i a geb auch gespeiche und kopie we den. Sie dü en die Dokumen e nich ü ö en liche ode komme zielle Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich machen, e eiben ode ande wei ig nu zen. So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen (insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en, gel en abweichend on diesen Nu zungsbedingungen die in de do genann en Lizenz gewäh en Nu zungs ech e. Te ms o use: Documen s in EconS o may be sa ed and copied o you pe sonal and schola ly pu poses. You a e no o copy documen s o public o comme cial pu poses, o exhibi he documen s publicly, o make hem publicly a ailable on he in e ne , o o dis ibu e o o he wise use he documen s in public. I he documen s ha e been made a ailable unde an Open Con en Licence (especially C ea i e Commons Licences), you may exe cise u he usage igh s as speci ied in he indica ed licence. h ps://c ea i ecommons.o g/licenses/by/4.0/ Mone a is , Keynesian and Quan i y Theo ies By Allan H. Mel ze , Pi sbu gh/Pa.* In economics as in o he de eloping sciences, change e odes he alue o popula e minology. Mone a ism is a name ha has been gi en o a pa icula se o p oposi ions a a pa icula poin o ime. Like Keynes- ianism, iscalism, o he "T easu y iew," he pa icula se o p opo- si ions called mone a ism does no ully desc ibe he body o hough accep ed by a loosely kni g oup o p ac icing economis s anymo e han e ms like Chicago, Camb idge o Aus ian School desc ibe he hough o all o whom he e ms a e applied. In he humani ies, such connec ions a e he subjec o ea ises; mos economis s a e use ully employed a o he , no less aluable, occupa ions. Thomas Maye 's s a emen ** o he se o p oposi ions cons i u ing "mone a ism" and hei in e ela ions akes he o m o an in en o y o a now success ul coun e — e olu ion in economic hough . Maye 's c i ics and commen a o s — Ma in B on enb enne , Ka l B unne , Phillip Cagan, Benjamin M. F iedman, Ha y G. Johnson and Da id Laidle — appea o accep his in en o y, al hough each would dele e, de-emphasize, o combine some o he i ems; and some c i ics, co ec ly, add o he lis p oposi ions abou exchange a es, balance o paymen s posi ion, and de e minan s o he s ock o money and he a e o in- la ion in open economies. Tha he coun e - e olu ion has been success ul, he e can be li le doub . Je ome S ein now w i es ha "a Keynesian can be a mone a is " (S ein, 1976), and James Tobin analyzes he condi ions o he "c owding ou " o p i a e expendi u e by deb inance (Tobin and Bui e , 1976, p. 296). Se e al cen al banks choose speci ic a ge a es o g ow h o * This pape e lec s many discussions wi h Ka l B unne and mo e e- cen ly wi h Edwa d P esco . I am indeb ed o B unne and P esco and o And é Fou gans, Benjamin F iedman, Robe Hod ick, Da id Laidle and pa icula ly o Thomas Maye o commen s on an ea lie d a . Wol Becke J . d ew he cha s. ** K edi und Kapi al, Vol. 8 (1975) pp. 191 and pp. 293. 10 K edi und Kapi al 2/1977 OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 150 Allan H. Mei ze some mone a y agg ega e and, mo e impo an ly, hey ha e shown g ea e abili y o each he a ge s han hey once admi ed o belie ed easible. I was no always so, and he his o y o science sugges s ha he pa icula se o p oposi ions ha Maye has lis ed will no d aw he same ag eemen s and disag eemen s a yea , o mo e su ely, a decade om now. The meaning o "mone a ism" will change i he e m emains use ul. The e is, also, gene al ag eemen be ween Maye and he commen a- o s on his pape ha he emaining a eas o disag eemen a e no analy ical issues bu a e empi ical issues ela ed o policy. The poin is, a imes, implici in Maye 's pape , a imes explici . B unne , Johnson and Laidle suppo he poin wi h examples o empi ical di e ences abou he e ec s o policies. Al hough Benjamin F iedman concen a es on analy ic issues, he oo no es ha he "dis inguishing con en o mone a ism is a se o empi ical p oposi ions" (F iedman, 1977, p. 347). Cagan and B on enb enne discuss a pa icula policy a angemen — a ixed mone a y ule — ha has been closely associa ed wi h mone- a ism in he wi ings o mony non-mone a is s and some mone a is s. Bu B on enb enne is empha ic also abou he b oade policy implica- ions ha cons i u e he mone a is s' " ision." To he ex en ha esol able di e ences abou policy emain, hey esul om wo dis inguishable ypes o empi ical judgmen . One is he alue o pa ame e s in pa icula equa ions; he second, and much mo e basic, empi ical issue conce ns he socie al e ec s o go e nmen policies, including he ela i e cos s and bene i s o collec i e and p i a e decision-making. The cos s include any loss o eedom and in- c eases in he na u e and ex en o unce ain y, loss o incen i es and he like. Maye 's p oposi ion 12, "dislike o go e nmen in e en ion" sugges s ha he di e ences abou he app op ia e oles o p i a e and go e nmen decisions a e solely a ma e o as e. James Tobin (1976, p. 336) w i es ha "mone a is policy ecommenda ions s em less om heo e ical o e en empi ical indings han om dis inc i e alue judgmen s." I disag ee wi h bo h s a emen s. Bo h igno e he empi ical and analy ical bases o mone a is policy ecommenda ions, and bo h ake a e y es ic ed iew o he ange o empi ical issues in he Key- nesian-mone a is deba e. In some ideal wo ld, di e ences be ween he OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 Mone a is , Keynesian and Quan i y Theo ies 151 e ec s o go e nmen and p i a e ac ion may anish, bu many mon- e a is s belie e ha , in p ac ice, expansi e iscal policies "c owd ou " eal capi al, lowe he long- un alue o ou pu pe man, encou age he g ow h o go e nmen and educe eedom. Discussions o coun e -cyclical policy e lec mo e han di e ences in alues and di e ences in empe ical judgmen s abou he long- e m e ec s o Keynesian policies. Di e en conclusions a e d awn abou sho - e m e ec s. Many o hese issues a e no ully esol ed a his ime. Mone a is s and Keynesians assign di e en meaning o in e - p e a ion o unemploymen . Consequen ly, hey di e abou he cos s and bene i s o educing o emo ing he isk o unemploymen by go e nmen policy o collec i e ac ion. The policies ecommended by mone a is s and Keynesians e lec empi ical judgmen s abou he e - ec s o policies and, also, di e ences abou he ope a ion o labo ma - ke s and he meaning and in e p e a ion o he luc ua ions in em- ploymen . Di e ences abou he in e p e a ion o unemploymen a e basic o he Keynesian-mone a is discussion, bu he di e ences a e un esol ed. Below I s a e he issues and hei ela ion o he discussion. Mone a is and Keynesian policy di e ences also e lec di e en assessmen s o e idence and di e ences in belie s. Belie s a ec he judgmen s and decisions o scien is s and policymake s, bu e idence changes belie s. Some expe imen s a e judged a success; o he s a e ega ded as ailu es. The his o y o he i s wen y- i e pos wa yea s, when he economic policy o many coun ies was inspi ed la gely by Keynesian in e p e a ions o e en s, cons i u es a body o e idence. So, oo, is he his o y o he pas se e al yea s when coun ies, aced wi h he same eal shock, adop ed al e na i e s a egies and achie ed di e - en ou comes.1 His o ical e idence o his kind may seem mo e enuous o insubs an ial han he ou pu o some la ge, qua e ly econome ic model o he economy. I is, ne e heless, a main eason ha belie s and policies change.2 1 An assessmen o some o hese expe iences can be ound in Michael Hambu ge and Ru be g Reisch (1976) and Da id Laidle (1976). 2 This in e p e a ion is by no means unique. See, o example, Codding on (1976, p. 1264) who desc ibes he pe iod o he i ies and ea ly six ies as a pe iod o "Keynesian en husiasm", hen adds pic u esquely ha Keynesian ideas " al e ed some ime in he middle six ies and s umbled in o he se en- ies". His o ical e idence is mos use ul when he e a e claims and coun e - claims as in he mone a is -Keynesian discussions o he six ies. 10* OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 152 Allan H. Mei ze Change does no mean ha he posi ions o belie s o some pas e a a e es o ed in ac . Mone a ism does no now deny all sho - un eal e ec s o iscal policy on ela i e p ices and eal demands, wha e e inco ec o incau ious s a emen s may ha e been made ea lie . Bu , mone a is s ques ioned he eliabili y and du abili y o iscal e ec s and he long- un cos s o achie ing sho - un inc eases in ou pu by iscal expansion. These conclusions — once sco ned as e o — a e now widely held.3 Mone a ism is nei he he quan i y equa ion edisco e ed no he quan i y heo y ebo n. Thomas Maye 's compa ison o quan i y and Keynesian heo ies sugges s ha he quan i y heo y and mone a ism a e ela ed bu dis inc .4 I sha e his iew. Resolu ion o policy issues in he mone a is -Keynesian deba e does no depend on he u h o he adi ional in e p e a ion o he quan i y heo y o he belie ha all ela i e p ices a e o e e cons an . No does i depend solely on he slopes o IS and LM as in Keynesian o neo-Keynesian heo ies. To ad ance he discussion and esol e issues, new elemen s ha e been in oduced.5 The new elemen s mo e he discussion beyond he discus- sion o quan i y e sus Keynesian heo y. In he ollowing sec ion, I conside he ela ion — and emphasize some di e ences — be ween quan i y, Keynesian, and mone a is heo- ies o he adjus men o economic ac i i y and p ices o nominal and eal shocks. Then, I discuss he in e p e a ion o unemploymen , a sub- jec on which many mone a is s and quan i y heo is s ha e iews ha a e dis inguishable om he Keynesian iew. My in e p e a ion o un- employmen has no , as a as I know, been p esen ed in i s p esen o m bu i will no seem s a ling o hose who ha e ollowed ecen de elopmen s in he heo y o employmen . I conclude by discussing 3 On he gene al poin abou he ype o change in "belie s" I ind mysel close o ag eemen wi h Blinde and Solow (1976 a, p. 502) al hough we may di e abou he size and du abili y o sho - un esponses. The MPS (o FRB-MIT) model also shows ha eal e ec s o iscal policy anish a e a sho pe iod. 4 Among he commen a o s B unne and Johnson sha e his iew; Cagan, howe e , appea s o ega d mone a ism as a e u n o he p inciples o he wen ies — i. e. o some ype o quan i y heo y. 6 The go e nmen budge equa ion is a p incipal example. Among ecen models o mally inco po a ing he go e nmen budge equa ion a e: Alan S. Blinde and Robe M. Solow (1973), Ka l B unne and Allan H. Mel ze (1972, 1976), Ca l Ch is (1968), Je ome S ein (1974) and James Tobin and William Bui e (1976). OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 Mone a is , Keynesian and Quan i y Theo ies 153 some emaining di e ences abou he meaning o unemploymen and he ole o go e nmen . I. Adjus men in Mone a is and Quan i y Theo ies The e m "mone a ism" was coined in Ka l B unne 's (1968) a icle, bu many o he issues in he mone a is -Keynesian con o e sy had been b ough o p o essional a en ion much ea lie by F iedman (1956). Un o una ely, F iedman did no ollow he p omising pa h he de el- oped bu , ins ead, blu ed he dis inc ion be ween his new app oach and he quan i y heo y. In his sec ion, I dis inguish mone a ism om quan i y and Keynesian heo ies. F iedman's quan i y heo y o 1956 is nei he Keynesian — as ha e m was unde s ood a he ime — no a classical, quan i y heo y. Recogni ion o he ole o in e es a es in he demand unc ion o money accep ed one o Keynes's a gumen s ha classical economis s did no s ess and may no ha e accep ed. In o he impo an espec s, F iedman's demand unc ion o money depa s om Keynesian heo y, as ha e m was unde s ood a he ime, in a leas h ee ways. Fi s , F iedman (1956, pp. 4, 5,10,19) di ec s a en ion away om cu - en income and owa d weal h as a de e minan o he demand o money. The concep o income ele an o his analysis is he capi alized alue o all sou ces o "consumable se ices" — su ely a long- un concep o be diss inguished om he concep o "income as i is o dina ily measu ed" (1956, p. 4).* The quan i y o eal balances ha households desi e o hold depends on weal h and income, no on cu en eceip s. Second, he way in which money a ec s economic ac i i y di e s om Keynesian analysis. F iedman discusses, a leng h, he e ec on he demand o money o changes in yields on bonds, equi ies, physical goods and human weal h. Mos o hese yields we e no , and o en a e no ye , a gumen s o he Keynesian demand unc ion o money.7 6 This issue is no se led. Albe Ando and F anco Modigliani (1975) a emp o p o e analy ically ha weal h does no a ec he demand o money. They claim ha only cu en income and sho - e m in e es a es a e ele an . Selden (1956) showed yea s ago ha income eloci y is mo e closely ela ed o equi y e u ns han o bond yields o bill a es, al hough he did no pu sue he analysis. See Hambu ge (1977) o mo e ecen e idence on his poin . 7 One need only compa e he ecen empi ical wo k by Gold eld (1973, 1977) and Hambu ge (1977) on he demand o money o see ha he OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 154 Allan H. Mei ze F iedman*s iew o wha is now called he ansmission mechanism o mone a y policy is dis inc om he iews exp essed by Keynesians a he ime. Mos Keynesian heo is s hen claimed ha changes in he s ock o money a e adequa ely summa ized by he esponse o sho - e m in e es a es o money, and o in es men o in e es a es. Many s ill do.8 The Keynesian iew is now ound in he s a emen ha he ela i e esponses o mone a y and iscal policy a e summa ized by he in e es elas ici ies o in es men (o IS) and he demand o money (o LM). Mone a is s, a leas om he ime o F iedman's essay, s essed he ole o o he ela i e p ices and weal h in addi ion o in e es a es and insis ed ha policies a ec economic ac i i y h ough many di - e en channels.9 Thi d, he liquidi y ap has much mo e impo ance in Keynesian heo y han in he Gene al Theo y. Mone a is s deny he ele ance o he liquidi y ap. One eason is ha he demand o money depends on many ela i e p ices o a es o in e es in addi ion o he a e on sho - di e ences a e subs an ial and a ec in e p e a ion o pas e en s and policies. Gold eld chose he pe iod o he ea ly se en ies o es he "s abili y" o demand unc ions o money. The es esul s a e clea and Gold eld's in e p e a ion o his esul s is inco ec . He does no show ha he demand o money is uns able. Compa ison o he pape s by Hambu ge and Gold eld shows ha he adi ional Keynesian demand unc ion in which money subs i u es only o "bonds" is less eliable han a unc ion ha allows a b oade ange o subs i u es. 8 Tobin is a pa ial excep ion. His gene al equilib ium amewo k (Tobin 1969 and Tobin and Bui e 1976) is o en used as e idence ha he e a e ew emaining di e ences abou he ansmission o adjus men p ocess. One o Maye 's commen a o s, Benjamin F iedman (1977) de elops his a gumen , and i is co ec as a s a emen abou gene al equilib ium models. Al hough he e a e di e ences in de ail and in me hod o p esen a ion, he e is li le o mal di e ence be ween he gene al equilib ium amewo k in Tobin (1969) o Tobin and Bui e (1976) and he models o weal h o ela i e p ice adjus men p oposed in B unne and Mel ze (1963) and de eloped in B unne and Mel ze (1968, 1972, 1976). He e he simila y ends. As Tobin (1976) poin s ou , he e a e subs an ial di e ences in policy conclusions. Tobin appea s o d aw his policy implica ions om an IS-LM amewo k in which he e is only a single a e o in e es . The gene al equilib ium, ela i e p ice adjus men , o his o mal model, appea s o be neglec ed. The a e o p ice change seems o be de e mined by a Phillips cu e ha shi s slowly o no a all in esponse o all, an icipa ed and unan icipa ed, iscal and mone a y policies. B unne and Mel ze do no neglec ela i e p ice changes and make he expec ed a e o in la ion depend, in e alia, on pas a es o mone a y g ow h. 9 The e ec o weal h on he demand o money is men ioned by Ma shall (1923); he neglec o weal h by Keynes was ecognized ea ly by Habe le (1952). OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 Mone a is , Keynesian and Quan i y Theo ies 155 e m secu i ies. Keynesians selec ed he sho - e m a e as he only in e - es a e ele an o he demand o money (Ando and Modigliani, 1975). Hence, he allega ion ha he ma ke in e es a e on sho - e m secu- i ies app oached a lowe asymp o e was su icien e idence o many Keynesians o decla e ha a liquidi y ap exis ed in he hi ies. F ied- man's insis ence on he many a es ele an o po olio choice denied he ele ance o e idence o his kind. The ansmission p ocess o F iedman's quan i y heo y (1956) no only di e ed om he Keynesian heo y o he ime he w o e, bu he o mal s uc u e di e s om he classical quan i y heo y. The quan i y heo y in Tho n on, Rica do o Hume elies mainly on he e ec o changes in he quan i y o money on expendi u e and much less, i a all, on changes in ela i e p ices and in e es a es.10 One eason is ha , in he absence o changes in he condi ions o p oducing gold, classical heo is s expec ed he gold s anda d o keep he p ice le el luc ua ing a ound a alue ha emained cons an o decades.11 Fluc ua ions in in e es a es, he e o e, mean ei he long- un changes in eal a es o sho - un, empo a y changes esul ing om cyclical luc ua ions o he p ice le el a ound a long- un cons an alue. Fluc ua ions in he equilib ium eal a es we e ea ed as small, so he discussion o economic luc ua ions cen e ed on he consequences o depa u es o he p ice le el om he long- un le el de e mined by as es, p oduc- i i y, and eal esou ces on one side and he quan i y o money on he o he . This sec ion p esen s a simple model o illus a e he adjus men mechanism in he classical quan i y heo y and he di e ences be ween 10 A ecen , excellen econside a ion o classical heo y o he balance o paymen s is F enkel (1976). F enkel discusses he ole o ela i e p ices (in e es a es) in he classical heo y o he balance o paymen s and con- as s wo app oaches o adjus men . One equi es shi s in expendi u e ela i e o income. The o he equi es changes in ela i e p ices. See also Vine (1965). I belie e classical heo is s mainly discuss he i s o hese adjus men s whe eas F iedman (1956) emphasizes he second in his essay. F iedman (1956, p. 19), howe e , men ions he classical explana ion and i is his app oach ha he ollowed subsequen ly. 11 Pe suasi e e idence on he iews o classical economis s abou he p ope ela ion o p ice le els o money is he Repo o he Commi ee on he High P ice o Bullion w i en in 1810. The epo u ged he e- sump ion o specie paymen s a he 1797 p ice o gold. The policy, adop ed se e al yea s la e , equi ed a 50% educ ion in he p ice le el. A cen u y la e , in 1919 - 25, he Bank o England de la ed again o es o e he 1797 p ice o gold in pounds s e ling. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 156 Allan H. Mei ze mone a is , Keynesian and quan i y heo ies. In he classical quan i y heo y, po olio heo y is deemphasized; he p incipal al e na i e o holding money is spending o buy goods. In mone a is heo y, as in Keynesian heo y, money is held in po olios, bu he de e minan s o he demand o money and he esponse o changes in money di e . The quan i y equa ion se s agg ega e spending, MV, equal o nominal ou pu , py. Classical economis s ea ed cyclical luc ua ions in eloci y as small, ela i e o changes in M, and minimized he e ec on eloci y o in e es a es o ela i e p ices and ou pu . Equa ion (1) makes eloci y cons an , so luc ua ions in spending a e en i ely he esul o changes in money. A end a e o change o eloci y could be added o ecognize imp o emen s in paymen a angemen s. (1) MV = py (2) y = F (K, L) + £ Equa ion (2) has wo componen s. The i s , called pe manen ou pu o pe manen income, is equal o ull employmen ou pu . The second ecognizes ha eal shocks cause cu en eal ou pu (y) o depa om s eady s a e equilib ium ou pu . De ia ions, e, a e assumed, he e, o be no mally dis ibu ed wi h ze o mean and cons an a iance, a, a mode n in e p e a ion o he classical iew ha ou pu luc ua es a ound a s a iona y alue (o end a e o g ow h i echnical change is admi - ed). (3) M = D + R The money s ock is base money and is he sum o domes ic asse s (D) and o eign ese es (R). The meaning o "money" changed om he 17 h o he 19 h cen u y. Bullionis s ce ainly did no include domes ic ea ning asse s as pa o he money s ock o mone a y base. By he ea ly 19 h cen u y, howe e , he e ec on p ices o issuing "pape c edi " was ecognized widely. Many w i e s included domes ic ea ning asse s as a sou ce o base money (Vine , 1965). The nex equa ion ies o cap u e he spi i bu no he le e o a classical heo y o luc ua ions. Changes in ese es depend on he di e ence be ween he domes ic p ice le el (p) and o eign p ice le el (p*). The exchange a e (X) gi es he numbe o uni s o domes ic cu - ency ha exchange o a uni o o eign cu ency. The esponse o p ices OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 Mone a is , Keynesian and Quan i y Theo ies 163 which he esponse o go e nmen policies sp eads om asse ma ke s o ou pu and he p ice le el. The classical mechanism o adjus men — changes in he p ice le el — eappea s in mone a is analysis, bu now changes in he p ice le el induce subs i u ion be ween new p oduc ion and exis ing asse s as well as be ween domes ic and o eign asse s and ou pu . Subs i u ion o e a b oad ange o exis ing asse s changes ela i e p ices o asse s and he p ices o asse s ela i e o new p oduc- ion as in B unne and Mel ze (1963, 1976). The impo ance gi en o ela i e p ices in Keynesian analysis di e s wi h he le el o abs ac ion. Much emphasis is gi en o a b oad ange o subs i u es in gene al equilib ium mac o models, bu he e is much less emphasis in discussion o policy o policy implica ions. (See Foo no e 8.) Keynesian economis s equen ly assume away he classical mechanism o adjus men by holding p ice le els cons an du ing pe iods o less han ull employmen , (Tobin and Bui e , 1976). A ixed p ice le el lea es po olio adjus men , o en na owly concei ed as subs i u ion be ween money and sho - e m secu i ies, o do he wo k elegan ly desc ibed in he gene al equilib ium mac o model. The addi ional as- sump ion ha bonds and eal capi al, o bonds and money, a e pe ec subs i u es b ings he o mal model in o close co espondence wi h policy ecommenda ions. The in e es a es in F iedman's (1956) demand unc ion o money canno be educed o a single a e o e u n, " he in e es a e" o Keynesian heo y, by assuming han all a es o p ice change a e ully an icipa ed. The di e ence be ween he a e o in e es on bonds and equi ies is app oxima ely (1956, p. 9) 1 d b 1 d e 1 dp Tb ~ Te =~ b~ ~d ~~ ~ ~ ~d ~p~ ~d 1 d whe e and e a e in e es a es on bonds and equi ies, — — is he capi al gain o loss an icipa ed (o ecei ed) on bonds o equi ies and ~ is he an icipa ed (o ac ual) a e o in la ion. The " a ional expec a ion" ha ac ual and an icipa ed a es o in la- ion a e equal is no su icien o equa e eal e u ns o bonds and equi y. Fluc ua ions in ea nings s eams, pa icula ly he an icipa ed ea nings acc uing o owne s o eal capi al, induce sho - un changes in he ela i e p ices o asse s and ou pu . Go e nmen policies a ec an ic- ipa ions o u u e ea nings by changing he applicable ax a es, by OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 164 Allan H. Mei ze al e ing pe cei ed isks, by aising o lowe ing he ne bene i s acc uing o hose who bea isk, and in o he ways. Cyclical luc ua ions, whe he induced by eal shocks o by changes in he s ocks o inancial asse s, a ec he cu en and u u e p ices o asse s and ou pu . Mo eo e , a change in he an icipa ed a e o in la ion a ec s F ied- man's demand o money by changing he p ices o he goods held as in en o ies ela i e o he alue o he se ices o he goods. F iedman, like Tho n on, dismisses he weal h e ec o a change in asse alues, bu I know o no e idence ha his channel is less impo an han o he s o sho - un adjus men s. I we deno e he p ices o asse s as P and he p ice o he ou pu (o se ices) by p, as be o e, he pe pe iod ela i e a es o change o he wo p ice le els en e he demand o money and become pa o he adjus men p ocess. Some economis s who do no ega d hemsel es as mone a is s o policy pu poses accep wha I ha e called he mone a is heo y o adjus men , jus as many economis s o nce accep ed he Keynesian heo y o adjus men wi hou ully accep ing policy s a emen s abou he impo ence o mone a y policy. Theo ies o adjus men , o ansmis- sion, p o ide a amewo k o assessing e idence and d awing con- clusions abou ela i e e ec s and abou he size and iming o ad- jus men . Keynesian conclusions may con inue o be d awn, and Key- nesian policies ecommended, by hose who accep a mone a is ans- mission heo y in gene al i hey deny speci ic aspec s o make as- sump ions abou empi ical magni udes. Tobin and Bui e (1976) as- sume ha he p ice le el o a e o in la ion emains ixed when he e is unemploymen . Thus, hey deny an impo an piece o he mone a is adjus men p ocess wi hou denying he alidi y o he heo e ical amewo k. Ando and Modigliani (1975) deny ha he demand o money depends on weal h and on many o he ela i e p ices jus discussed. B unne and Mel ze d aw mone a is policy conclusions om hei amewo k and hei judgmen s abou ele an esponses. In hei e sion o mone a is heo y (1972, 1976) he esponse o ou pu o changes in money and in deb inanced iscal policy depend on he elas ici ies o he p ice le el wi h espec o he mone a y base and he s ock o go e nmen deb . The la ge he esponse o he p ice le el o he base, he la ge is he esponse o mone a y policy. The smalle he esponse o he p ice le el o go e nmen expendi u e and o deb issued OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 Mone a is , Keynesian and Quan i y Theo ies 165 o inance de ici s, he smalle is he esponse o iscal policy. Judg- men s abou he ela i e esponse o he p ice le el o mone a y and iscal a iables lead B unne and Mel ze o mone a is policy con- clusions. S ein (1974) eaches e y simila conclusions in a di e en way.18 Accep ance o a common heo y o adjus men nei he elimina es di e ences in policy no makes all emaining di e ences depend on alue judgmen s. II. In e p e ing Unemploymen The mone a is -Keynesian deba e is no es ic ed o di e ences abou he ways in which agg ega e spending, ou pu and he p ice le el a e b ough o a new equilib ium. The meaning and in e p e a ion o measu ed unemploymen di e s. This sec ion ela es he al e na i e in e p e a ions o heo ies o employmen . Keynesians ollow Keynes and ega d all cyclical unemploymen as in olun a y, he esul o insu icien spending by he p i a e sec o . E en i he unemployed ecei e compensa ion equal o he p e ailing money wage, socie y loses all o he ou pu ha would ha e been p oduced a ull employmen . Hence, go e nmen policies o elimina e unemploymen ha e low cos s and la ge social bene i . I he a e o in la ion emains a he ully an icipa ed a e ollowing he ecession, he e a e ew cos s o o se he bene i s o expansionis policies. In Keynesian heo y, no only is cyclical unemploymen in olun a y, i is unce ain as o iming, du a ion and equency. Wo ke s canno educe unemploymen by educing money wages, o a leas hey do no . Downwa d igidi y o money wages explains he excess supply o labo , and slowe adjus men o wages han o he p ice le el explains why eal wages ise in pe iods o ecession. Social policy is based on he Keynesian in e p e a ion. The cu - en legal de ini ion o unemploymen ea s all cyclical unemploymen as "in olun a y". A wo ke is unemployed i he is desc ibed as ha ing looked o wo k a leas once in a ou week pe iod.19 18 S ein (1976), Mei ze (1977) and Ko eweg and Mel ze (1978, o hcom- ing) p esen e idence showing ha in all coun ies and ime pe iods examin- ed he esponse o domes ic p ices o domes ic iscal policy is small. 19 Felds ein (1975) discusses some o he ways in which he de ini ion is expanded. 11 K edi und Kapi al 2/1977 OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 166 Allan H. Mei ze The p oblem s a s om he ambigui y in Keynes's de ini ion o in olun a y unemploymen . Keynes (1936, p. 15) called unemploymen "in olun a y" i a ise in he p ice le el ha educes eal wages inc eases employmen . The de ini ion and i s subsequen use by Key- nesians and policymake s igno es wo dis inc ions. One is he dis inc- ion be ween an icipa ed and unan icipa ed p ice and wage changes, he o he he dis inc ion be ween an icipa ed income and cu en eceip s. The i s dis inc ion has been cla i ied in he ex ended discussion o he Phillips-cu e, bu he deg ee o which luc ua ions in employmen a e an icipa ed emains. The classical in e p e a ion o unemploymen di e s om he Key- nesian in e p e a ion. The quo a ion om Tho n on (1965, pp. 118—19), ep oduced abo e, does no deny he possibili y o cyclical unemploy- men . On he con a y, Tho n on desc ibes unemploymen as "unusual and empo a y dis ess" a ising o easons ha a e widely known as Keynesian: Money wages a e mo e igid downwa d han a e p ices. Fo Tho n on, howe e , money wages a e igid upwa d as well i an- icipa ed in la ion emains cons an . Tho n on's cha ac e iza ion o unemploymen as "unusual and em- po a y dis ess" is no les sambiguous han Keynes's e m, "in olun a y." The mechanism p oducing employmen is clea e , howe e . Fo clas- sical heo is s, cyclical luc ua ions in employmen and ou pu a e a consequence o eal shocks ac ing on he quan i y o commodi ies cu - en ly demanded by shi ing supply and o mone a y dis u bances ac ing on spending. Shi s in agg ega e spending and in agg ega e supply induce la ge luc ua ions in p ices han in money wages, so eal wages change in e sely o he p ice le el when spending inc eases and change di ec ly wi h he p ice le el when supply inc eases. Unemploymen and eal wages a e posi i ely ela ed ollowing a educ- ion in spending bu a e nega i ely ela ed ollowing a educ ion in supply. Tho n on (1965, pp. 237 - 9) is explici abou he ela ion o p ices and ou pu .20 20 Tho n on's a gumen (pp. 237 - 9) has a mode n ing. A p oduce con- ounds he ex a gain esul ing om he ise in he p ice o his in en o ies "wi h he o he p o i s o his comme ce and is induced, by he appa en suc- cess o his unde akings o pu sue hem wi h mo e han usual spi i ." Tho n- on subsequen ly quo es app o ingly om Hume's Essay on Money (i alics in Tho n on): "'In my opinion, i is only in his in e al o in e media e si ua ion be ween he acquisi ion o money and he ise o p ices' (M . Hume mus mean, no doub , he comple ion o he ise, and no he commencemen OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 Mone a is , Keynesian and Quan i y Theo ies 167 Classical and mone a is in e p e a ions o unemploymen di e om he Keynesian in e p e a ion in a simila way. Bo h ea he ype o unemploymen obse ed du ing mild cycles as a empo a y o ansi o y phenomenon. The mone a is in e p e a ion an eda es ecen o mal wo k on he heo y o employmen and luc ua ions by Aza iadis (1975), Baily (1974), Lucas (1977), Phelps (1970) and Phelps and Taylo (1977). Howe e , ecen wo k by hese and o he economis s, many o whom a e no mone a is s, p o ides a be e ounda ion o he mone a is in e p e a ion. The mone a is in e p e a ion s a s om F iedman9s (1957) dis inc- ion be ween pe manen and ansi o y income — o be ween income de ined as an expec ed s eam and cu en eceip s.21 Suppose a wo ke , who beha es acco ding o he pe manen income hypo hesis, expe ien- ces a cyclical "lay o ". The pe manen income heo y implies ha , a i s , he has no eason o sea ch o al e na i e employmen o o educe his eal wages. As long as his expe ience emains consis en wi h he an ici- pa ions he held when he chose his job o ca ee , as modi ied by sub- sequen expe ience, he ega ds he lay o as a d awing om he an i- cipa ed dis ibu ion o ime be ween labo and leisu e ha he used o de e mine pe manen income and li e ime consump ion. Each day o lay o con ains in o ma ion leading o a e ision o his an icipa ed income, bu each day o lay o has li le e ec on wo ke s in indus ies subjec o cyclical swings in employmen and ou pu . o i ) ' ha he enc easing quan i y o gold and sil e is a ou able o in- dus y."' A oo no e o his passage c i icizes Hume o sugges ing ha he inc eased money changes ela i e p ices a home. Tho n on a gues o he mechanism discussed in a p e ious sec ion. The inc ease in money sends money ab oad by ising " he gold p ice o a icles abo e hei le el in o he coun ies, allowing o he cha ges o anspo a ion." Bu his akes ime, as Tho n on eminds his eade s in he same oo no e. "[I] is a i med by F ench w i e s ha he no es o M . Law's bank appea ed o a ime o ha e a e y powe ul in luence in ex ending he demand o labou , and in augmen ing he isible ... p ope y o he kingdom." 21 F iedman's impo an con ibu ion o he heo y o employmen (1968) does no ely on his dis inc ion be ween pe manen and ansi o y income bu , ins ead, emphasizes he di e ence be ween an icipa ed and unan ici- pa ed changes in wages o nominal income. Unan icipa ed and ansi o y changes a e ela ed, o cou se, and bo h a ec eal wages. As used in economics, he wo a e no he same. The dis inc ion be ween an icipa ed and unan icipa ed sepa a es cu en o u u e om pas e ec s o in la ion on eal alues; he dis inc ion be ween pe manen and ansi o y applies o he e ec s o luc ua ions in economic ac i i y on cu en eceip s and employmen . 11» OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 168 Allan H. Mei ze E e y day o lay o is coun ed as pa o measu ed unemploymen , bu , as long as income an icipa ions a e no e ised, pe manen income emains unchanged and he wo ke is no unemployed in an economic sense. The e is no loss o agg ega e ou pu . A wo ke becomes unemployed when he e ises, downwa d, his pe - manen income. He no longe an icipa es ha cu en leisu e and u u e ea nings a e consis en wi h his consump ion plan. He aces he choice o educing income and consump ion ei he by emaining idle o by educing his cu en eal wage. I his an icipa ion is co ec , his loss o income is a measu e o he loss o ou pu o socie y. The dis inc ion be ween measu ed and economic unemploymen is he amilia dis inc ion be ween cu en eceip s and income, basic o classical and mode n heo y. Fo classical economis s, as o F iedman (1957), an icipa ed income is known; he iming o eceip s is unce ain. Receip s luc ua e a ound an icipa ed income, bu , as long as an icipa- ions a e i mly held, he p esen alue o e e y nega i e de ia ion is o se by an icipa ed posi i e de ia ions. When nega i e de ia ions a e no o se , an icipa ions change; wo ke s a e unemployed. The e a e wo sou ces o unce ain y abou he iming o eceip s ele an o he agg ega e — he eal and nominal shocks in oduced in o he classical model summa ized by equa ions (6) and (2'). Bo h shocks change cu en ou pu , y, ela i e o an icipa ed ou pu , F (K, L), in equa ion (2'). Nominal shocks change he p ice le el ela i e o money wages, and eal shocks change cu en ou pu by e. I he ob- se ed luc ua ions in cu en ou pu a e d awings om he an icipa ed dis ibu ion, he de ia ion o cu en ou pu om y0 = F(K, L) does no cause a e ision o plans in he agg ega e. Any changes in indi idual plans cancel. The communi y's an icipa ed income emains consis en wi h p oduc i e capabili y, yo.22 22 This s a emen equi es adjus men o ake accoun o (1) di e ences be ween mone a y and ba e economies and (2) any di e ences in he non-pecunia y se ices o deb and eal capi al. The eason is ha he se ices o money and any non-pecunia y se ices o deb and capi al a e pa o income a ailable o consump ion bu a e no included in he ma ke alue o he income p oduced. (The e m income used he e is, as in he ex , dis inc om cu en eceip s.) The quali ica ion does no a ec he main poin in he ex i he non-pecunia y se ices a e like yo a long- e m independen o cu en eceip s. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 Mone a is , Keynesian and Quan i y Theo ies 169 Classical w i e s did no , as a as I know, p o ide an economic ex- plana ion o he slowe adjus men o wages han o p ices. Keynes, like Tho n on, i s assumes ha wages a e slow o adjus , hen o e s an explana ion based on a pa icula se o assump ions abou an icipa- ions (1936, Chap. 19). The pe manen income heo y o employmen s a s by ecognizing he di icul in e ence p oblem aced by indi idual wo ke s and em- ploye s in an economy subjec o eal and nominal shocks. Rela i e p ices and he gene al p ice le el change. A wo ke who is laid o canno be ce ain whe he he change is pe manen o empo a y, whe he he will soon e u n o wo k a his p e ious employmen , as many do (Felds ein, 1975), o mus seek new employmen . An o e o educe eal wages in ecession o main ain employmen in oduces a - iabili y in o income o he pu pose o smoo hing cu en eceip s. Un- less he wo ke is ce ain ha he educ ion in income esul ing om lowe eal wages oday can be ully o se by inc eases in u u e eal wages and income, li e ime consump ion and u ili y a e educed. The pe manen income heo y gi es no eason o wo ke s o educe eal wages as long as an icipa ions a e unchanged. Figu e 2 shows he e ec o changes in expendi u e on ou pu and p ices. An icipa ed income emains a ull employmen , yo, bu cu en ou pu and eceip s luc ua e. A nominal shock educes spending o Ei Ei; cu en p oduc ion alls o yi, and he p ice le el alls o pi. A pi yu he economy eaches empo a y, sho - un equilib ium. The demand o labo alls. The amoun o he labo supplied depends in p, so he quan i y supplied inc eases as p alls. Money wages, w, all i he as- sump ion ha wages change less han p ices is co ec . Employmen is less han Lo, he le el o employmen when ou pu is yo, so he e is empo a y measu ed unemploymen . As long as agg ega e an icipa ed income emains yo, an icipa ed li e ime ea nings o he labo o ce e- main ixed. The di e ence be ween cu en ea nings and an icipa ed ea nings is ansi o y income.23 Measu ed unemploymen a ies cyclically in he pe manen income heo y. A yi pi, employmen is less han ull employmen , Lo, bu 23 Fo pe iods o in la ion and g ow h, he classical and pe manen income heo ies o employmen should be ecas in e ms o a es o wage change ela i e o a es o p ice change and a es o change o ou pu . This modi- ica ion is igno ed in he ex and has no impo ance o he analysis p es- en ed he e, OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 170 Allan H. Mei ze Figu e 2 The E ec o Changes in Spending on he Ou pu Ma ke g ea e han "Keynesian employmen " because w alls. In he Keynes- ian heo y, money wages a e comple ely igid, and he labo supply cu e is d awn as a e e se "L" a he ull employmen wage. In he pe manen income heo y, wo ke s do no educe eal wages by lowe - ing money wages in ecession, unless an icipa ed li e ime income changes. Nei he do hey main ain money wages a he ull employmen money wage, wo. To main ain equi es wo ke s o accep mo e e- duc ion in employmen han is consis en wi h hei li e ime plans and cu en an icipa ions. Money wages a e " igid" downwa d in he pe manen income heo y bu a e also " igid" upwa d as long as an icipa ions o u u e p ices and pe manen income emain unchanged. In pe iods o high expendi u e, shown as E2 E2 in Figu e 2, ou pu is y% and he p ice le el is P2 a he in e sec ion o Eg Es and yy employmen and money wages ise. I Tho n- on's assump ion is co ec , money wages ise less han p ices, so eal wages all. Wo ke s could aise he eal wage a e o a le el equal o ID — by educing he supply o labo . Ins ead, hey ega d he educed OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 Mone a is , Keynesian and Quan i y Theo ies 171 eal wage and inc eased employmen du ing his pe iod as pa o hei expe ience ha includes inc eased eal wages and lowe employmen ollowing nominal shocks ha b ing ecessions, lowe eal wages and educed employmen ollowing nega i e eal shocks, and highe eal wages and highe employmen ollowing posi i e eal shocks. As long as he p esen alue o he gains and losses o eal income emains consis en wi h an icipa ed li e ime income, he e is no eason o he supply cu e o labo as a unc ion o he eal wage o shi .24 The pe manen income heo y o employmen does no deny ha wo ke s can specula e on eal wages, o e ing mo e employmen when eal wages ise, and educing employmen when eal wages all. The heo y sugges s, howe e , ha wo ke s as a g oup mus o ecas wages and he demand o employmen , sepa a ing empo a y om pe - manen shocks and eal om nominal shocks. This ask is easie in a classical wo ld, whe e ela i e p ice changes a e es ic ed o he ela i e p ice o domes ic and o eign ou pu . In a mone a is economy, ela i e p ices o exis ing asse s and new p oduc ion o home coun y goods and se ices also espond o eal and nominal shocks and induce changes in he alloca ion o spending and in ou pu ha mus be sepa a ed om he agg ega e e ec s. The in e ence p oblem is mo e di icul . The pe manen income heo y implies ha eal wages ise i eces- sion is induced by a nominal shock and all i ecession is induced by eal shocks. The simple co ela ion be ween eal wages and unemploy- men discussed by Modigliani (1977, p. 7) con ains no in o ma ion abou he pe manen income heo y (o any o he heo y) un il i is combined wi h a s a emen abou he dominan cause o ecessions and booms. A posi i e associa ion be ween eal wages and unemploymen du ing e- cessions suppo s he pe manen income hypo hesis i ecessions a e mainly he esul o shi s in agg ega e demand. Mone a is s' policy s a emen s dis inguish one la ge, nega i e eal shock in ecen yea s — he oil emba go and subsequen ise in he ela i e p ice o oil in 1973/74. All o he pos — Wo ld Wa II ecessions a e a ibu ed o go e nmen policies and mainly o mone a y policies 24 Felds ein (1975) shows ha du ing ela i ely mild cycles a ise in meas- u ed unemploymen does no lead many wo ke s o sea ch. Wo ke s an ici- pa e, co ec ly, his s udy sugges , ha mos will e u n o wo k a hei p e ious employmen a e a sho ime. Fo hem, as o Tho n on, ac ual and an icipa ed unemploymen is a empo a y phenomenon. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 172 Allan H. Mei ze as a p incipal d i ing o ce in he economy. A compa ison o u ning poin s in eal wages and in economic ac i i y is no a decisi e es o he pe manen income heo y, bu i p o ides some e idence on a p in- cipal implica ion o he heo y.25 Table 1 compa es he peaks and oughs in he economy o he oughs in eal wages om 1948 o 1974. In he i s i e pos wa cycles in he U.S.- eal wages ose du ing all o mos o he con ac ion as he hypo hesis implies. In ou o he i e, he ough in eal wages comes a he peak o he p eceding expansion o ea lie . In he 1957/58 con ac ion eal wages ell o he i s mon hs o con ac ion, bu s a ed o ise be o e he ough in he economy. Table 1 Da es o Tu ning Poin s in Real Wages and Economic Ac i i y 1948 - 1974 (USA) T ough in Real Wages Peak in Economy T ough in Economy 2nd q . 1948 No . 1948 Oc . 1949 2nd q . 1952 July 1953 May 1954 1s q . 1958 Aug. 1957 Ap il 1958 2nd q . 1960 Ap il 1960 Feb. 1961 4 h q . 1969 Dec. 1969 No . 1970 4 h q . 1974 No . 1973 Ma ch 1975 Sou ce: BCD, June 1976, pp. 112 and 93; BCD, Feb. 1977, p. 105. The six h con ac ion combines a eal shock and a mone a y con- ac ion. The mone a y con ac ion came almos a yea a e he eal shock and ollowed a sha p educ ion in he g ow h o money. Real wages ell ollowing he eal shock, eached a ough du ing he mone- a y con ac ion, ou h qua e 1974, hen ose. The mo emen o eal wages du ing his con ac ion is consis en wi h he pe manen income hypo hesis also. Qua e ly da a on eal wages a e no a ailable o ea lie pe iods in he cen u y. The h ee highes a es o change o eal wages du ing 25 Judgmen en e s in he choice o oughs in eal wages. Real wages do no all in 1953 and 1960. The a e o change becomes nea ze o o ze o in hese wo cases. I ha e omi ed a peak and ough in eal wages ollowing he s a o he Ko ean Wa . The e was no ecession. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 Mone a is , Keynesian and Quan i y Theo ies 179 o Employmen , In e es and Money. London. — Ko eweg, Pie e and Mei ze , Allan H. (1978). "In la ion and P ice Changes: Some Es ima es and Tes s," Ca negie-Roches e Con e ence Se ies, 8, ( o hcoming). — Laidle , Da id (1976). "In la ion — Al e na i e Explana ions and Policies: Tes s on Da a D awn om Six Coun ies," Ca negie-Roches e Con- e ence Se ies, 4, suppl. o Jou nal o Mone a y Economics, pp. 251 - 307. — Lucas, Robe E. J . (1977). "Unde s anding Business Cycles," Ca negie- Roches e Con e ence Se ies, 5, suppl. o Jou nal o Mone a y Economics, pp. 7-29. — Ma shall, Al ed (1923). "Money, C edi and Comme ce.. London: Macmillan. — Maye , Thomas (1977). "A Compa ison o Unemploymen Ra es P io o he G ea Dep ession and in he Pos wa Pe iod" (mul i i hed). — Mei ze , Allan H. (1977). "An icipa ed In la ion and Unan icipa ed P ice Change: A Tes o he P ice-Specie Flow Theo y and he Phillips Cu e," Jou nal o Money, C edi and Banking, 9, pp. 182 - 205. — Modigliani, F anco (1977). "The Mone a is Con o e sy o , Should We Fo esake S a- biliza ion Policies," Ame ican Economic Re iew, 67, pp. 1-19. — Pa inhin, Don (1965). Money In e es and P ices, 2nd ed. New Yo k: Ha pe and Row. — Phelps, Edmund S. (1970). Mic oeconomic Founda ion o Employ- men and In la ion Theo y. New Yo k: W. W. No on. — Phelps, Edmund S. and Taylo , John B. (1977). "S abilizing Powe s o Mone a y Policy unde Ra ional Expec a ions." Jou nal o Poli ical Economy, 85, pp. 163 - 90. — P esco , Edwa d (1977). "Should Con ol Theo y Be Used o Economic S abiliza ion?" Ca negie-Roches e Con e ence Se ies, 7, suppl. o Jou nal o Mone a y Economics, pp. 13 - 38. — Seiden, Richa d T. (1956). "Mone a y Veloci y in he Uni ed S a es," in M. F iedman (ed.) S udies in he Quan i y Theo y o Money. Chicago: Uni e si y o Chicago P ess. — S ein, Je ome L. (1974). "Unemploymen , In la ion and Mone a ism," Ame ican Economic Re- iew, 64, pp. 861 - 889. — S ein, Je ome L. (1976). "A Keynesian Can Be a Mone a is ," in Mone a ism, J. L. S ein (ed.) Ams e dam, No h-Holland. — Tho n on, Hen y (1965). "An Enqui y in o he Na u e and E ec s o he Pape C edi o G ea B i ain" (1802). New Yo k: Kelley. — Tobin, James (1969). "A Gene al Equilib ium App oach o Mone a y Theo y," Jou nal o Money, C edi and Banking, 1, pp. 15 - 29. — Tobin, James (1976). "Is F iedman A Mone a is ?" in Mone a ism, J. L. S ein (ed.) Ams e dam: No h-Holland. — Tobin, James and Bui e , William (1976). "Long- un E ec s o Fiscal and Mone a y Policy on Agg ega e Demand," in Mone a ism, J. L. S ein (ed.) Am- s e dam: No h-Holland. — Vine , Jacob (1965). "S udies in he Theo y o In e na ional T ade (1937)." New Yo k: Kelley. Zusammen assung Mone a is ische, Keynesianische und Quan i ä s-Theo ien Mone a ismus is wede eine wiede en deck e Quan i ä s heo ie noch eine Neuau lage de keynesianischen Theo ien. Thomas Maye 's Bilanz de mone- a is ischen Leh sä ze* e aß iel sowohl on dem Cha ak e als auch om * K edi und Kapi al, 8. Jg. (1975), S. 191 . und S. 293 . OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 180 Allan H. Mei ze Inhal mone a is ische Sä ze übe eine um assende Poli ik in eine geschlos- senen Volkswi scha . Sie a bei e Ähnlichkei en und Un e schiede de mone a is ischen und keynesianischen Theo ien gu he aus. Die o male Ähnlichkei on mone a is ische und keynesianische Theo ie e gib sich aus de En wicklung beide Theo ien bis zu einem Punk , bei dem die e bleibenden Un e schiede nu noch empi ische Na u sind. Dies is jeden alls die Posi ion, die in de einen ode ande en Weise on Thomas Maye und den meis en Kommen a o en seines Au sa zes e e en wi d. Die o liegende A bei üh iele de haup sächlichen Un e schiede zwi- schen den mone a is ischen, keynesianischen und Quan i ä s-Theo ien au d ei mi einande in Beziehung s ehende U sp ünge zu ück. Eine da on is die Holle de ela i en und absolu en P eise beim Anpassungsp ozeß on eine Gleichgewich slage zu ande en. Ein zwei e is die Auswi kung on Schwankungen des Realeinkommens, on Risikoände ungen und de Vo - wegnahme on Ände ungen de ela i en P eise einschließlich de P eise ü eale und nominale Anlagen. De le z e schließlich is ein wesen liche Un e schied, de zu un e schiedlichen Poli ik-Emp ehlungen on Keynesia- ne n und Mone a is en üh . Beschä igungs- und P oduk ionsschwankungen we den om mone a is i- schen S andpunk ausgehend on einem Zei p ä e enzen-Modell e klä , das im üb igen bei ielen ökonomischen Theo ien eine Rolle spiel . Das Modell un e scheide zwischen e wa e em Einkommen und lau enden Bezügen ode (in F iedman's Te minologie) zwischen daue ndem und o übe gehendem Einkommen. Es geh on eine ganz ande en E klä ung de Un e beschä i- gung aus als die keynesianische Theo ie (sowohl die äl e e als auch die jün- ge e), in de jede konjunk u elle Un e beschä igung „un eiwillig" is . Es we den einige Folge ungen aus de Theo ie des daue ha en Einkom- mens gezogen und de G und ü die Annahme disku ie , daß zwischen al e na i en Theo ien de Un e beschä igung un e schieden we den kann. Summa y Mone a is , Keynesian and Quan i y Theo ies Mone a ism is nei he he quan i y heo y edisco e ed no Keynesian heo y ew i en. Thomas Maye *s summa y o mone a is p oposi ions* cap u es much o he spi i as well as he subs ance o mone a is p op- osi ion abou agg ega e policy in a closed economy and b ings ou simi- la i ies and di e ences be ween mone a is and Keynesian heo ies. The o mal simila i y be ween mone a is and mode n Keynesian heo y is he esul o de elopmen o bo h heo ies o a poin a which he emain- ing di e ences a e empi ical. This is he posi ion aken, in one way o ano he , by Thomas Maye and mos o he commen a o s on his pape . * K edi und Kapi al, Vol. 8 (1975) pp. 191 and pp. 293. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 Mone a is , Keynesian and Quan i y Theo ies 181 The pape aces many o he p incipal di e ences be ween mone a is , Keynesian and quan i y heo ies o h ee ela ed sou ces. One is he ole o ela i e and absolu e p ices in he p ocess o adjus ing om one equi- lib ium posi ion o he nex . A second is he e ec o luc ua ions in eal income, changes in isk and an icipa ions on ela i e p ices including he p ices o eal and nominal asse s. A hi d is he meaning and in e p e a ion o luc ua ions in ou pu and employmen . The las is a p incipal di e ence leading o di e ences in he policy ecommenda ions by economis s iden i- ied as Keynesian and mone a is s. Mone a is in e p e a ions o luc ua ions in employmen and ou pu s a om he model o ime p e e ence ha unde lies much o economic heo y. The model dis inguishes be ween an icipa ed income and cu en eceip s o , in F iedman1 s e sion be ween pe manen and ansi o y income. This model sugges s a e y di e en in e p e a ion o unemploymen han he Keynesian heo y, in old o new o ms, whe e all cyclical unemploymen is ega ded as "in olun a y". Some implica ions o he "pe manen income heo y'' a e d awn, and he e is discussion o e idence ha could disc imina e be ween al e na i e heo ies o unemploymen . Résumé Théo ies moné a is es, keynesiennes e quan i a i es Le moné a isme n'es ni une héo ie edécou e e de la quan i é ni une e o mula ion des héo ies keynesiennes. Le bilan des hèses moné a is es i é pa Thomas Maye * e ien une bonne pa du ca ac è e e de la eneu des hèses moné a is es su une poli ique globalisan e dans une économie e mée. Ce bilan ai ès bien esso i les simila i és e les dispa i és exis an en e les héo ies moné a is es e keynesiennes. La simila i é o melle des héo ies moné a is e e keynesienne ésul e du dé eloppemen des deux héo ies jusqu'au poin où les di e gences es an es ne son plus que de na u e empi ique. C'es en ou cas la posi ion dé endue d'une maniè e ou d'une au e pa Thomas Maye e pa la plupa des com- men a eu s de son é ude. Le p ésen a icle impu e nomb e des p incipales di é ences cons a ées en e les héo ies moné a is e, keynesienne e quan i a i e à ois o igines qui ne son pas sans lien en e elles. Une de ces o igines es le ôle des p ix ela i s e absolus dans le p ocessus d'ajus emen d'une si ua ion d'équilib e à une au e. Une deuxième es l'e e des a ia ions du e enu éel, des changemen s de isques e des an icipa ions de modi ica ions des p ix ela i s, y comp is des p ix des placemen s éels e nominaux. La oisième o igine en in es une di e gence essen ielle qui condui les key- nesiens e les moné a is es à o mule des ecommanda ions poli iques dis- semblables. * c . K edi und Kapi al, 8e année (1975), pages 191 e sui es ainsi que 293 e sui es. 12 K edi und Kapi al 2/1977 OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45 182 Allan H. Mei ze Les luc ua ions d'emploi e de p oduc ion s'expliquen du poin de ue moné a is e au dépa d'un modèle de p é é ences empo elles, qui in e - ien d'ailleu s dans de nomb eusses héo ies économiques. Le modèle dis- ingue en e e enu escomp é e salai es cou an s ou (selon la e minologie de F iedman) en e e enu du able e ansi oi e. Les moné a is es on une ou e au e explica ion du sous-emploi que les keynesiens ( an dans l'ancienne que dans la nou elle héo ie) pou lesquels ou sous-emploi con- jonc u el es „acciden el". Ce aines conclusions son i ées de la héo ie du e enu du able a an d'examine les ondemen s de l'hypo hèse de la possibili é de dégage des héo ies al e na i es du sous-emploi. OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/ DOI h ps://doi.o g/10.3790/ccm.10.2.149 | Gene a ed on 2023-01-16 12:41:45