The Loanable Funds Fallacy: Exercises in the Analysis of Disequilibrium.
This essay analyses the core proposition of loanable funds theory that changes in technology and time preferences directly and immediately affect interest rates. Applying what may be seen as a generalised financial-buffers approach to the analysis of disequilibrium, we find that loanable funds theory is flawed and should therefore be abandoned. A challenge to the neo-Walrasian general equilibrium approach to monetary theory remains: that of justifying the idea that--by some mechanism--intertemporal prices correctly reflect technology and time preferences. Copyright 2001 by Oxford University Press.
Year of publication: |
2001
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Authors: | Bibow, Jorg |
Published in: |
Cambridge Journal of Economics. - Oxford University Press. - Vol. 25.2001, 5, p. 591-616
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Publisher: |
Oxford University Press |
Saved in:
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