Circuitist and Keynesian Approaches to Money: A Reconciliation?

Keynesian monetary theory focuses on money as a store of value, seen as a defence against uncertainty. Circuitist economists emphasize the role of money as means of payment and downplay its function of store of value. The paper, by drawing on Hicks's and Kaldor's contributions, suggests an...

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Bibliographic Details
Published in:Metroeconomica 2017-05, Vol.68 (2), p.205-227
Main Author: Sardoni, Claudio
Format: Article
Language:English
Subjects:
Analysis
Economic theory
Keynesian theory
Money
Securities markets
Studies
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Summary:Keynesian monetary theory focuses on money as a store of value, seen as a defence against uncertainty. Circuitist economists emphasize the role of money as means of payment and downplay its function of store of value. The paper, by drawing on Hicks's and Kaldor's contributions, suggests an approach in which the fundamental functions of money are those of unit of account and means of payment. The function of money as store of value is regarded as marginal, because in economies with well‐developed financial markets it can be played by other assets as liquid and risk‐less as money. The demand for liquidity as a defence against uncertainty is kept distinct from the demand for money. This approach to money makes it easier to develop a framework in which the Keynesian and circuitist approaches can be reconciled and co‐exist.
ISSN:0026-1386
1467-999X
DOI:10.1111/meca.12115