Working Paper: NBER ID: w3595
Authors: Stanley Fischer
Abstract: Twenty five years after the publication of the second edition, this paper describes and evaluates the Contributions to monetary and macroeconomics made in Don Patinkin's Money, Interest, and Prices (MIP). Its first accomplishment was to settle definitively many issues, such as the valid and invalid dichotomies between real and nominal magnitudes, Say's identity, the nature of the Keynesian system, and the requirements for the neutrality of money, which had been disputed for decades. It also opened the road to the future by developing macroeconomic models from a well specified microeconomic foundation. In so doing, it established the base on which subsequent equilibrium macroeconomics built. Beyond that, in Chapter XII, Patinkin pioneered the development of disequilibrium analysis by presenting a fully articulated model that makes the key distinction between notional and effective demands, and using it to explain price and quantity adjustments in conditions of unemployment.
Keywords: monetary theory; macroeconomics; real balance effect
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| aggregate price level changes (E30) | real wealth (E21) |
| real wealth (E21) | demand for real balances (E41) |
| aggregate price level changes (E30) | demand for nominal balances (E41) |
| quantity of money changes (E41) | price level adjustments (E30) |