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Rethinking the Keynesian RevolutionKeynes, Hayek, and the Wicksell Connection$
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Tyler Beck Goodspeed

Print publication date: 2012

Print ISBN-13: 9780199846658

Published to Oxford Scholarship Online: September 2012

DOI: 10.1093/acprof:oso/9780199846658.001.0001

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The Wicksell Connection

The Wicksell Connection

(p.16) Chapter 1 The Wicksell Connection
Rethinking the Keynesian Revolution

Tyler Beck Goodspeed

Oxford University Press

This chapter introduces Knut Wicksell to readers who may not be particularly familiar with his work. The chapter elucidates his monetary theory, the “cumulative process,” based on the distinction between a “natural” and “money” rate of interest. We also explore the crucial links between Wicksell’s monetary theory and the capital theory that buttresses his natural rate. The chapter concludes by defining the Wicksell “connection” as consisting of monetary nonneutrality, a focus on intertemporal dis-coordination driven by inconsistency between planned saving and investment, and a recognition that consistency of information and knowledge is essential to the coordination of economic activity, particularly where the element of time is involved.

Keywords:   Wicksell, natural rate, money rate, capital

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