Neoclassical Theory of Money (Monetary Issues): With Graphs, Equations & Formulas! Neoclassical theory of money has been developed as a part of reaction against the Keynesian revolution. Keynes repudiated the classical theory of full - employment equilibrium and demonstrated the possibility of less - than - full employment equilibrium. The counter - revolution which was initiated by Pigou in 1943, [...]
Equations for quantity theory of money by different economists! 1. The Cambridge Equation: The Cambridge economists explained their cash-balance approach to the quantity theory of money by formulating equations known as Cambridge equations. The Marshallian cash-balance equation is expressed as follows: M = KPY where, M is the quantity of money (currency plus demand deposits); P is the price level; [...]
In this article we will discuss about the quantity theory of money by Cambridge, Keynes and Friedman, along with its criticisms. 1. Cambridge Cash-Balance Approach: During almost the same period when Fisher was developing his equation of exchange in America, Marshall, Pigou, Robertson, Keynes, etc. at the Cambridge University popularised the classical Cambridge cash-balance approach to the quantity theory of [...]