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Circuitist and Keynesian Approaches to Money: A Reconciliation?
Author(s) -
Sardoni Claudio
Publication year - 2017
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/meca.12115
Subject(s) - economics , endogenous money , value (mathematics) , money measurement concept , time value of money , payment , keynesian economics , monetary economics , demand deposit , function (biology) , market liquidity , quantity theory of money , money market , velocity of money , monetary policy , finance , biology , machine learning , evolutionary biology , computer science
Keynesian monetary theory focuses on money as a store of value, seen as a defence against uncertainty. Circuitist economists emphasize the role of money as means of payment and downplay its function of store of value. The paper, by drawing on Hicks's and Kaldor's contributions, suggests an approach in which the fundamental functions of money are those of unit of account and means of payment. The function of money as store of value is regarded as marginal, because in economies with well‐developed financial markets it can be played by other assets as liquid and risk‐less as money. The demand for liquidity as a defence against uncertainty is kept distinct from the demand for money. This approach to money makes it easier to develop a framework in which the Keynesian and circuitist approaches can be reconciled and co‐exist.