The Liquidity of Money

In his General Theory, Keynes implicitly defines liquidity as stability of value with respect to changes in the state of long-term expectation. This contrasts with the usual conception of liquidity as convertibility and with leading Post-Keynesian interpretations. The proposed definition explains wh...

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Bibliographic Details
Published in:Cambridge journal of economics 2018-09, Vol.42 (5), p.1205-1218
Main Author: Hayes, M. G.
Format: Article
Language:English
Subjects:
Capital goods
Keynesian theory
Liquidity
Markets
Money
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Summary:In his General Theory, Keynes implicitly defines liquidity as stability of value with respect to changes in the state of long-term expectation. This contrasts with the usual conception of liquidity as convertibility and with leading Post-Keynesian interpretations. The proposed definition explains why Keynes places so much emphasis on liquidity, while assuming perfect markets for capital goods, and writes of the liquidity of land. It also sheds new light on the distinction Keynes makes between the liquidity of money and the ‘liquidity’ of organised investment markets.
ISSN:0309-166X
1464-3545
DOI:10.1093/cje/bey018