Interest and Prices (Geldzins und Güterpreise). A Study of the Causes Regulating the Value of Money.

WICKSELL Knut (1936.)

£1750.00  [First Edition]

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A MAJOR INFLUENCE ON THE KEYNESIAN SCHOOL

Translated from the German by R.F. Kahn. With an Introduction by Professor Bertil Ohlin. First edition in English. 8vo. xxxi, [1], 219, [1] pp. Original blue cloth, spine lettered and ruled in gilt, ruling to boards in blind, dust jacket (faint partial offsetting to endpapers, spine panel of jacket slightly marked with some very minor wear to head and tail, otherwise an excellent copy). London, MacMillan & Co., Ltd.

Originally published in 1898, Wicksell's principal work on monetary theory, 'which contained his most original contribution to economics' (Blaug) and proved a major influence on the Keynesian school. 

'In Interest and Prices, his most enduring contribution, he more or less founded modern macroeconomics by going back to Tooke's contra-quantity theory of money, according to which the price level is determined not by the quantity of money but by the national income in the form of the total flow of expenditure on goods and services. While rejecting Tooke's argument, he restated the old quantity of money so as to emphasise expenditure flows, carefully distinguishing the direct effect of an increase in the quantity of money on prices via the cash balances individuals are willing to hold and the indirect effect on prices that operate through variations in the rate of interest. The idea that this indirect effect arises when the money rate of interest deviates from the real rate of return on new capital projects had appeared in the earlier writings of Thornton and Ricardo. Wicksell seems to have been inspired by a single passage in Ricardo's Principles (1817), a book which he was in the habit of reading again and again. He called this real rate of return the 'natural rate of interest', arguing that if it exceeded the loan rate of interest for any reason whatsoever, a 'cumulative process' of price inflation would result, coming to a halt only if the banking system runs up against a legal or conventional reserve requirement. This led him to analyse criteria of monetary equilibrium in the sense of a monetary and banking system that would maintain a stable level of prices (Blaug).

Stock Code: 235107

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