Search

Modigliani's 1944 “Econometrica” article is considered one of the most important efforts to reconcile Keynes with classical economic thinking through the wage rigidity hypothesis. The paper reconstructs the genesis of Modigliani's article and compares Modigliani's and Patinkin's interpretation of the wage–employment relationship. It also discusses Modigliani's contribution to the neoclassical synthesis, arguing that Modigliani's attention to the monetary origin of and solution to unemployment contrasts with the neoclassical synthesis neglecting of the monetary side of the system and its inclination towards fiscal policy.

Robert W. Clower's article "A Reconsideration of the Microfoundations of Monetary Theory" (1967) deeply influenced the course of modern monetary economics. On the one hand, it revealed the deadlocks of Don Patinkin's project to integrate monetary and Walrasian value theory. On the other hand, it was the fountainhead of the cash-in-advance models à la Robert J. Lucas (1980), one of the most widely used approaches to monetary theory since the 1980s. Despite this influence, there is no detailed study of Clower's (1967) project to integrate monetary and value theory. My paper aims to fill this gap. This is a difficult task since Clower never completed the monetary theory outlined in his 1967 article. To overcome this difficulty, I characterize the intellectual context from which Clower's (1967) contribution emerged and have recourse to a rational reconstruction of his project. This reconstruction is based on the analysis of published and unpublished materials, written by Clower before and after the 1967 article. Four conclusions are obtained. First, Clower (1967) intended to reorient Patinkin's program to integrate monetary and value theory. Second, this reorientation was prompted by Clower's (1965) influential search for disequilibrium microfoundations to Keynesian macroeconomics. Third, Clower's (1967) project was to formulate a disequilibrium monetary theory. Fourth, such a project failed because of Clower's (1965) approach to disequilibrium economics.

International audience; This paper studies Patinkin's contribution to the development of IS-LM, mostly Money Interest and Prices (1956), by comparing it to Modigliani's (1944, 1963). Patinkin's originality, it is claimed, lies in his analyzing the IS-LM model with a Walrasian methodology. Whereas Modigliani lacked an adequate method to deal with general equilibrium, his Walrasian approach allowed Patinkin to complete, to correct and to clarify the IS-LM model. However, in spite of its superiority, Patinkin's Walrasian recasting of the IS-LM model did not replace Modigliani's model as the referential version of IS-LM. To explain this fate, it is contended that Patinkin's work marked a methodological bifurcation in the history of IS-LM, opening a route departing from the original conception of IS-LM associated with Hicks and Modigliani and which was Marshallian in spirit.

Modigliani's 1944 "Econometrica" article is considered one of the most important efforts to reconcile Keynes with classical economic thinking. The aim of this paper is to reconstruct the genesis of Modigliani's article and to reexamine its place in the construction of Neoclassical Synthesis. Modigliani introduced the wage rigidity hypothesis to show how monetary factors influence real variables such as the employment level and the interest rate. Modigliani’s attention to the monetary origin of and solution to unemployment is in stark contrast to the neglect in Neoclassical Synthesis of the monetary side of the system and its inclination towards fiscal policy antonella.rancan@unimol.it

1. An important conclusion of this work to be noted is it may not necessary to have an explicit relationship between money and prices- like the quantity theory one. What is necessary and important is that there should be a relation between the growth rates of absolute outputs and money. Money affects output and employment. 2. Wages are not assumed to be rigid. The assumption of a perfectly mobile labour (that fits in with the theory with perfect markets) does not fit in with the assumption of rigid wages. Labour is not always a growable stock as well. The economy has to employ the available stock of labour if it were to maintain its growth momentum. Therefore, effective demand has been abandoned in favour of full demand. Given the level of employment, all people should work, “earn” money and hence “determine” output. 3. A one line conclusion that this exploration leads to is this: Output grows, money does not constrain labour (it cannot) and prices do not constrain distribution; in effect, they all determine level of new money, new outputs, new interest, new employment, new prices and new income distribution. Individuals create wealth by being employed and hence contribute to savings, hence to investment and hence to growth. All this happens because they are in constant pursuit of at least maintaining their wealth. They are not the Walrasian wealth maximisers. In fact, individual wealth in a monetary economy is a by-product of national wealth/ income. In a monetary economy, money alone is able to make entrepreneurs produce and workers work. It is an enabler to the entire economic activity. It is like a catalyst in a chemical reaction. 4. In a monetary economy, a valid question is – does the interest rate get a liquidity trap? The answer could be “it may”. But as we have pointed out in the course of analysis, in a monetary economy, liquidity trap may not have harmful prescriptions for the economic activity. The government and the central monetary authority would ensure that in this situation, enough support would be forthcoming such that it would have minimal implications for the economy as a whole. Finally, money is or can never be a veil in a monetary economy. Real balances cannot be an explanation for disequilibrium in a monetary economy. 5. A monetary economy will always face a disequilibrium if let loose. A regulator is required to manage the entire economic activity. Money calls for a truly integrated economic system with individual roles for producers, workers, monetary & fiscal authorities.

In the opening sentence of Money, Interest, and Prices, Patinkin noted that his book was the outgrowth of ideas first presented in his doctoral dissertation. This claim has attracted the attention of most scholars who wrote about his works in recent years. As shown by Boianovsky (2006), Merhling (2002) or Rubin (2002), reading Patinkin's doctoral dissertation shed new light on his major work. However, these articles only contain partial presentations of the thesis. This essay contributes to fill in this gap. It offers a detailed presentation of the second part of Patinkin's Ph.D and claims that this document foreshadowed the research programs of disequilibrium theorists of the 1970's.

This work deals with the demand for money theories and applications of error correction Models and VAR models for the demand for money in the Czech Republic. In the theoretical part of the work are discussed theory of demand for money, with an emphasis on Patinkins theory of demand for money and the wording of VAR models and error correction models. In the application part are applied VAR (1), VAR (2) models and error correction models on the demand for money in the Czech Republic. Data used in the work come from the information system CNB and the CZSO.

This essay focuses on the most mysterious part of Money, Interest and Prices, namely chapters 13 and 14 on involuntary unemployment and the Keynesian theory. It aims to show how some pieces of evidence taken from Patinkin's archives clarify the meaning and the scope of these chapters.

National audience; This paper analyzes the controversy which opposed Clower and Patinkin about the validity of Walras law within the framework of the Keynesian theory. Quite paradoxically, it demonstrates that if Clower confronted Patinkin on this point it was precisely because he followed the conception of the Keynesian theory set out in chapter 13 of Money, Interest and Prices. The paradox, it is shown, is due to the fact that Patinkin refused to admit that his own theory questioned Walras law. On this basis, we offer an interpretation of the impasse on which the debate ended, a fact revealed by the correspondence between the two economists in 1990.; Cet article propose une analyse de la controverse qui a opposé Clower et Patinkin au sujet de la validité de la loi de Walras dans le cadre de la théorie keynésienne. Il démontre, de façon quelque peu paradoxale, que l'opposition de Clower à Patinkin, sur ce point, est due à la fidélité du premier à l'égard de la conception de la théorie keynésienne défendue par le second dans le chapitre 13 de Money, Interest and Prices. Ce paradoxe s'explique par le refus de Patinkin d'admettre la remise en cause de la loi de Walras impliquée par sa propre théorie. Sur cette base, nous proposons une interprétation de l'impasse sur laquelle s'est achevée le débat, une issue révélée par la correspondance entre les deux auteurs datée du début des années 1990.

International audience; This paper intends to explain how was a supporter of Keynes like Don Patinkin led to integrate the Pigou effect, the arch anti-Keynesian effect, in his theory of involuntary unemployment. The reading of Patinkin's unpublished PhD thesis and the use of the Don Patinkin Papers from Duke University's archives shed new light on this key episode in the formation of the 'neoclassical synthesis'. Using this material, we show that Patinkin changed his mind on this topic and that his incorporation of the real balance effect into the Keynesian apparatus was, paradoxically, an attempt at reinforcing it.

International audience; This paper studies Patinkin's contribution to the development of IS-LM, mostly Money Interest and Prices (1956), by comparing it to Modigliani's (1944, 1963). Patinkin's originality, it is claimed, lies in his analyzing the IS-LM model with a Walrasian methodology. Whereas Modigliani lacked an adequate method to deal with general equilibrium, his Walrasian approach allowed Patinkin to complete, to correct and to clarify the IS-LM model. However, in spite of its superiority, Patinkin's Walrasian recasting of the IS-LM model did not replace Modigliani's model as the referential version of IS-LM. To explain this fate, it is contended that Patinkin's work marked a methodological bifurcation in the history of IS-LM, opening a route departing from the original conception of IS-LM associated with Hicks and Modigliani and which was Marshallian in spirit.

International audience; This paper explains the reasons that led Don Patinkin to interpret the Keynesian theory in a disequilibrium perspective. We claim that the author adopted this position because he believed that the assumption of wage rigidity misrepresented the concept of involuntary unemployment and that, consequently, it had to be rejected. It is shown that this conclusion resulted from the confrontation of Patinkin, during the writing of his Ph.D. thesis, with the interpretations of the Keynesian theory argued respectively by Oskar Lange, Lawrence Klein and Franco Modigliani.