De Economist

, Volume 126, Issue 1, pp 37–60 | Cite as

Unresolved questions in monetary theory: A critical review

  • Victoria Chick


The basic questions of monetary theory remain unanswered. There is little agreement on a definition of money or what assets serve as money, much less on the nature of the private and social costs and benefits of a money economy. Controversy over these questions is reviewed critically. It is concluded that the extensive literature on these matters is not in fact very illuminating. Some new avenues of enquiry are suggested. Generalisation of Clower's exchange matrix suggests that money is only one of a hierarchy of budget restraints, and that money's contribution to efficient price-setting goes beyond its role as numeraire. Finally, questions of control of the money supply are considered.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. [1]
    Bronfenbrenner, M., ‘Some Fundamentals of Liquidity Theory,’Quarterly Journal of Economics, LIX (1945), pp. 405–426.Google Scholar
  2. [2]
    Brunner, K. and A. Meltzer, ‘The Uses o f Money: Money in the Theory of an Exchange Economy,’American Economic Review, LXI (1971), pp. 784–805.Google Scholar
  3. [3]
    Burstein, M. L.,Money, Cambridge, Mass., 1963.Google Scholar
  4. [4]
    Chick, V.,The Theory of Monetary Policy, London, 1973.Google Scholar
  5. [5]
    Clayton, G., J. C. Gilbert and R. Sedgwick, eds.,Monetary Theory and Monetary Policy in the 1970s, London, 1971.Google Scholar
  6. [6]
    Clower, R. W., ‘A Reconsideration of the Microfoundations of Monetary Theory,/rsWestern Economic Journal, VI (1967), pp. 1–9.Google Scholar
  7. [7]
    Clower, R. W.,Monetary Theory, Harmondsworth, Middlesex, 1969.Google Scholar
  8. [8]
    Einaudi, L., ‘The Theory of Imaginary Money from Charlemagne to the French Revolution,’ translation from the original in F. C. Lane and J. C. Riemersma, eds.,Enterprise and Secular Change, London, 1953.Google Scholar
  9. [9]
    Einzig, P.,Primitive Money, Oxford, 1948.Google Scholar
  10. [10]
    Ellis, H. S.,German Monetary Theory, Cambridge, Mass., 1934.Google Scholar
  11. [11]
    Fleming, M., ‘The Timing of Payments and the Demand for Money,’Economica, XXXI (1964), pp. 132–57.Google Scholar
  12. [12]
    Friedman, M., ‘Government Revenue from Inflation,'Journal of Political Economy, LXXIX (1971), pp. 846–856.Google Scholar
  13. [13]
    Goodhart, C. A. E.,Money, Information and Uncertainty, London, 1975.Google Scholar
  14. [14]
    Gurley, J. G. and E. S. Shaw,Money in a Theory of Finance, Washington D.C., 1960.Google Scholar
  15. [15]
    Hicks, J. R.,Critical Essays in Monetary Theory, Oxford, 1967.Google Scholar
  16. [16]
    Johnson, H. G., Seignorage and the Social Saving from Substituting Credit for Commodity Money,’ in R. A. Mundell and A. K. Swoboda, eds.,Monetary Problems of the International Economy, Chicago, 1969.Google Scholar
  17. [17]
    Keynes, J. M.,The General Theory of Employment, Interest and Money, London, 1936.Google Scholar
  18. [18]
    Marget, A. W., ‘The Monetary Aspects of the Walrasian System,’Journal of Political Economy, XLIII (1935), pp. 145–186.Google Scholar
  19. [19]
    Marget, A. W.,The Theory of Prices, 2 vols., New York, 1938 (Vol. 1) and 1942 (Vol. II).Google Scholar
  20. [20]
    Menger, K., ‘On the Origin of Money,’ trans. by C. A. Foley,Economic Journal, II (1892), 239–255.Google Scholar
  21. [21]
    Miller, H. L., Jr., ‘On Liquidity and Transactions Costs,’Southern Economic Journal, XXXII (1965), pp. 43–48.Google Scholar
  22. [22]
    Minsky, H. P., ‘Central Banking and Money Market Changes,’Quarterly Journal of Economics, LXXI (1957), pp. 171–187.Google Scholar
  23. [23]
    Niehans, J., ‘Money in a Static Theory of Optimal Payments Arrangements,’Journal of Money, Credit and Banking, I (1969), pp. 706–726.Google Scholar
  24. [24]
    Ostroy, J. M., ‘The Informational Efficiency of Monetary Exchange,’American Economic Review, LXIII (1973), pp. 597–610.Google Scholar
  25. [25]
    Radford, R. A., ‘The Economic Organisation of a P.O.W. Camp,’Economica, N.S. XII (1945), pp. 189–201.Google Scholar
  26. [26]
    Rosenstein-Rodan, P. N., ‘The Coordination of the General Theories of Money and Price,’Economica, N.S. III (1936), pp. 257–280.Google Scholar
  27. [27]
    Tobin,J., ‘Commercial Banks as Creators of “Money”,’ in D. Carson, ed.,Banking and Monetary Studies, Homewood, Ill., 1963.Google Scholar
  28. [28]
    Tower, E. and T. D. Willett, ‘The Theory of Optimum Currency Areas and Exchange Rate Flexibility: A More General Framework,’ U.S. Department of the Treasury Discussion Paper, 1975.Google Scholar
  29. [29]
    Yeager, L. B., ‘Essential Properties of the Medium of Exchange,’Kyklos, XXI (1968), pp. 45–68.Google Scholar

Copyright information

© H. E. Stenfert Kroese B. V. 1978

Authors and Affiliations

  • Victoria Chick
    • 1
  1. 1.University College LondonLondonUK

Personalised recommendations