The Wicksell Connection

Tyler Beck Goodspeed

in Rethinking the Keynesian Revolution

Published in print September 2012 | ISBN: 9780199846658
Published online September 2012 | e-ISBN: 9780199950126 | DOI:
The Wicksell Connection

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This chapter introduces Knut Wicksell to readers who may not be particularly familiar with his work. The chapter elucidates his monetary theory, the “cumulative process,” based on the distinction between a “natural” and “money” rate of interest. We also explore the crucial links between Wicksell’s monetary theory and the capital theory that buttresses his natural rate. The chapter concludes by defining the Wicksell “connection” as consisting of monetary nonneutrality, a focus on intertemporal dis-coordination driven by inconsistency between planned saving and investment, and a recognition that consistency of information and knowledge is essential to the coordination of economic activity, particularly where the element of time is involved.

Keywords: Wicksell; natural rate; money rate; capital

Chapter.  7723 words.  Illustrated.

Subjects: Economic Systems

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