Neutraal Geld, Een Overzicht Neutral money

Summary

This article traces the development of the concept of neutral money. Wicksell, Davidson, Hayek and Koopmans, though they sometimes referred to a barter economy, really treated neutrality of money as synonymous with monetary equilibrium. Post-war writers on the other hand, notably Patinkin, Gurley and Shaw, do not regard neutrality as synonymous with the maintenance of monetary equilibrium; instead, they take it to mean the restoration, following a monetary disturbance, of the original values of the real variables in a general-equilibrium model. The conditions of neutrality in the post-war sense are critically discussed. It is shown that static price expectations and an elasticity of price expectations equal to one are not necessary conditions for neutrality. Attention is paid to the distinction between inside money and outside money and to Pesek's and Saving's criticism of this distinction. Post-war and pre-war concepts of neutral money are compared. It is shown that Wicksell, Davidson and Hayek were thinking of different disturbances, both monetary and non-monetary in nature, when they formulated their criteria for neutrality. Koopmans' approach was the most general one. Finally, the rôle of money in general-equilibrium models is discussed. What is lacking is a general-equilibrium model to accommodate transaction costs and what is often — confusingly — callednon-tatônnement pricing (pricing which permits trade at non-equilibrium prices).