Tag Archives: money neutrality

One of Keynes’s central tenets — in clear contradistinction to the beliefs of mainstream economists — is that there is no strong automatic tendency for economies to move toward full employment levels in monetary economies. Money doesn’t matter in mainstream macroeconomic models. That’s true. But in the real world in which we happen to live, money does certainly matter. Money is not neutral and money matters in both the short run and the long run.... "New Keynesianism" isn't Keynesian. It...

I have read an article from Hyman Minsky which is only 6 pages long but contains some major arguments of his thought. There are also some very nice quotes to take out of the text. The article was published in the FRBNY Quarterly Review issue of spring 1992 on pages 77-82. Minsky attacks equilibrium economics: econoblog 101Minsky in 1993 on the Non-Neutrality of MoneyDirk Ehnts | Lecturer at Bard College Berlin

Hardcore neoclassical economist John Taylor has edited a new handbook of macro-economics. The good news: the sands are shifting. After 2008, more attention has been paid to the obvious fact that we’re living in a monetary world. Guess what: it turns out that money is non-neutral after all. Two examples (summaries below): (A) Bordo and Meissner claim that whenever a country has a large banking sector it has a choice, during a financial crisis. It can bail out the banks or it can try to...

Short simple summary of the meaning of "money neutrality."  Money neutrality is a key piece of conventional (neoclassical) economics. Keynes rejected money neutrality in a modern monetary production economy. Money neutrality is also foundational to monetarism based on the quantity theory of money.Bond Economics Primer: Money NeutralityBrian Romanchuk