Atlantic Economic Journal

, Volume 25, Issue 1, pp 18–36 | Cite as

Monetary aspects of Walras's law and the stock-flow problem

  • Leland B. Yeager
  • Alan A. Rabin


Walras's Law is a tautology. It illuminates interrelations among supplies and demands for goods, services, securities, and money and among their supply/demand imbalances. The Law emphasizes that no one thing or group of things can be in excess supply or excess demand by itself. It thereby helps focus attention on the role in macroeconomic disorder, especially in depression, of a distinctively functioning object of market exchange—money. Yet complications arise, and Walras's Law has itself sometimes been called into question. The purpose of this paper is to clarify the very concepts that enter into the Law and into supposed difficulties. Distinctions between "notional" and "effective" supplies and demands and between stock and flow conceptions of quantities and imbalances require attention.


International Economic Public Finance Focus Attention Market Exchange Excess Demand 
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Copyright information

© International Atlantic Economic Society 1997

Authors and Affiliations

  • Leland B. Yeager
    • 1
  • Alan A. Rabin
    • 2
  1. 1.Auburn UniversityUSA
  2. 2.The University of Tennessee at ChattanoogaUSA

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