This chapter suggests that a model of a costlessly produced, competitively supplied, convertible money is compatible with a macroeconomic model with a determinate price level, a classical dichotomy between the real and monetary sectors, in which Say's Law (Identity) is valid, the latter being...

This chapter uses the classical money model introduced in Chapter 2 to explain the different views of Adam Smith and David Hume on banking and the price-specie-flow mechanism (PSFM). These differences reappeared in the debates between the Banking School and the Currency School over Peel's Bank...

This chapter responds to criticisms by (Blaug, M. (1995). Why is the quantity theory the oldest surviving theory in economics? In M. Blaug (Ed.), The quantity theory of money: From Locke to Keynes and Friedman. Edward Elgar.) and (O’Brien, D.P. (1995). Long-run equilibrium and cyclical...