General Currency and Macroeconomic Theory

Author: Mundell
Publisher:
Publish Date: 2003-10-01
Features: The focus of the papers in this volume is: After a long and arduous debate with Keynesianism, it has been settled that the logic of classical theory is internally consistent. The importance of explicitly introducing the wealth effect into the classical model cannot be underestimated. Without the wealth effect, the determination of the price level would be impossible! By carefully reviewing the literature of classical economists, we find that all important classical economists explicitly considered the wealth effect. Shortly after, a significant paper reinterpreting the classical theory by explicitly considering the wealth effect using modern economic general equilibrium concepts emerged. The landmark classic paper by Lloyd Mints, "Wealth, Saving, and Interest," was published in the Journal of Policy Economics in 1951.