, Volume 26, Issue 4, pp 463-481
Date: 17 Jul 2013

The (quantity) theory of money and credit

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The Theory of Money and Credit (1912) is rightly regarded as a seminal book in the development of the Austrian school approach to monetary theory. We argue that Mises’ understanding of the equation of exchange differs from both of the conventional textbook versions, and warrants recognition as being a distinct contribution. After supporting this claim we discuss it in light of expectations, monetary regimes, and the microfoundations of the quantity theory.

Versions of this paper have been presented as “The (Quantity) Theory of Money and Credit: Monetarism and von Mises” City University Economics Department Seminar, (November 2012) and “The (Quantity) Theory of Money and Credit”, Association of Private Enterprise Education (APEE), Maui (March 2013), and we thank participants for useful feedback. We also acknowledge helpful comments from Nicolas Cachanosky and Kevin Dowd. The usual disclaimer applies.