Selected Essays in Monetary Economics (Collected Works of Harry Johnson)

Chapter VII

Inside Money, Outside Money, Income, Wealth and Welfare in Monetary Theory*

Monetary theorists have for many years been accustomed to proceed on the assumption that the fundamental nature and properties of money can be assumed to be known and agreed from the facts of experience, and to construct on this basis theoretical models which pay scant if any attention to the rationale for the incorporation of money and the theoretically correct way of incorporating it. Recently, however, monetary economists working in different areas have come to appreciate that the role of money in the economy is theoretically more complicated than appears at first sight, and have been grappling with the problem of formulating this role in a theoretically ...