Hume and Endogenous Money
David Hume’s monetary theory has three standard yet inconsistent readings. As a forefather of the quantity theory of money, Hume sees money as neutral. As an inflationist, Hume sees an active positive role for monetary policy. As a monetarist, Hume sees an active positive role for monetary policy only in the short run. This paper reads Hume consistently instead by showing that for Hume money is endogenous and demand-driven. Hume would read the money equation in terms of reverse causation and the co-movement of inflation and output growth as driven by demand. The tenets of 18th century monetary theory corroborate this reading.
Year of publication: |
2006
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Authors: | Paganelli, Maria Pia |
Published in: |
Eastern Economic Journal. - Eastern Economic Association - EEA, ISSN 0094-5056. - Vol. 32.2006, 3, p. 533-547
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Publisher: |
Eastern Economic Association - EEA |
Saved in:
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