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WICKSELL'S INFLATIONARY CREDIT CYCLE
Author(s) -
Gootzeit Michael J.
Publication year - 1993
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1993.tb00756.x
Subject(s) - economics , inflation (cosmology) , turning point , keynesian economics , inflation rate , point (geometry) , zero (linguistics) , monetary economics , nominal interest rate , interest rate , volume (thermodynamics) , real interest rate , macroeconomics , econometrics , period (music) , thermodynamics , physics , mathematics , theoretical physics , linguistics , philosophy , geometry , acoustics
The credit cycle implicit in Wicksell's upward cumulative process (UCP) is described. UCP may be interpreted as a stable cycle with two phases and an upper turning point corresponding to the maximum 2‐rate‐differential. The volume of credit and the rate of inflation is shown to expand in phase 1 and to contract in phase 2. The role of velocity increasing in causing a higher inflation rate is also described. This cycle has not been noticed in the literature because Lectures(2) was unclear about how long it would take to reach an upper turning point. But, Interest and Prices emphasized that the continuous return of the inflation rate to zero equilibrium would begin after a relatively short period.