Skip Navigation

This Article
Right arrow Full Text
Right arrow Full Text (PDF)
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrow Search for citing articles in:
ISI Web of Science (1)
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by Nell, E. J.
Right arrow Search for Related Content
Related Collections
Right arrow O21 - Planning Models; Planning Policy
Right arrow O23 - Fiscal and Monetary Policy in Development
Right arrow O31 - Innovation and Invention: [...]
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

Cambridge Journal of Economics 28:173-203 (2004)
Cambridge Journal of Economics, Vol. 28, No. 2, © Cambridge Political Economy Society 2004; all rights reserved

Monetising the Classical Equations: a theory of circulation

Edward J. Nell*

Address for correspondence: New School for Social Research, The Graduate Faculty, Department of Economics, 65 Fifth Ave, New York 10011, USA; email: EJNell{at}aol.com

The Classical Equations describe output and income in real terms. To use them to analyse aggregate demand, the transactions they describe must be ‘monetised’. A sum of money equal to the wage bill of the capital goods sector can be shown to be necessary and sufficient to carry out all transactions, in a process of circulation which also defines an expression for velocity. When money has intrinsic value, the quantity approach may hold in the short run but, in the long run, money will be endogenous. In these conditions, the rate of interest will be determined by the supply and demand for reserves, but when money is purely nominal, only a minimum rate will be fixed, and the rate of interest will have to be pegged. The Appendix develops the Classical Equations and shows that they define an invariable unit of account.

Key Words: Classical Equations • Circulation • Endogenous money • Rate of interest • Reserves

JEL classifications: O21, O23, O31, 311

Manuscript received September 1, 2000; final version received March 27, 2002.


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?


This article has been cited by other articles:


Home page
 Review of Radical Political EconomicsHome page
Y. Liang
Book Review: Growth, Distribution and Effective Demand
Review of Radical Political Economics, September 1, 2006; 38(3): 463 - 465.
[PDF]

Home page
 Cambridge J EconHome page
M. Lautzenheiser and Y. Yasar
Circulation and effective demand: a comment on Nell
Camb. J. Econ., July 1, 2006; 30(4): 651 - 656.
[Abstract] [Full Text] [PDF]


Disclaimer:
Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.