The Review of Austrian Economics

, Volume 25, Issue 3, pp 271–277 | Cite as

Monetary equilibrium and price stickiness: A rejoinder

  • Philipp Bagus
  • David Howden


Luther and Salter argue for a regime where aggregate demand is restored by an increase in the money supply in response to an increase in the demand for money. They claim that, 1) monetary equilibrium policy prescriptions do not necessarily rely on sticky prices, 2) Cantillon effects can be neglected without consequence, 3) wealth redistributions from monetary policy are unimportant, 4) monetary disequilibrium theorists strive for a stable price level, 5) fewer price adjustments are necessary in their proposed regime than in ours, 6) savings and saving are equivalent, 7) changes in the composition of savings do not alter time preference, and, 8) in their proposed regime economic calculation is easier than in a 100 % reserve system. All these claims are false. They furthermore misconstrue us as preferring negative quantity adjustments to positive price adjustments. This too is false.


Sticky prices Non-neutral money Monetary equilibrium Free banking 

JEL Classification

E52 E58 


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Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  1. 1.Department of Applied Economics IUniversidad Rey Juan CarlosMadridSpain
  2. 2.Department of Business and EconomicsSt. Louis University – Madrid CampusMadridSpain

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