Cumulative Process Models from Thornton to Wicksell

The celebrated Wicksellian theory of the cumulative process is a landmark in the history of monetary thought. It gave economists a dynamic, three-market (money, credit, goods) macromodel capable of showing what happens when banks, commercial or central, hold interest rates too low or too high. With it one could trace the sequence of events through which money, interest rates, borrowing, spending, and prices interact and evolve during inflations or deflations. The prototype of modern interest-pegging models of inflation, it influences thinking even today