Money, Uncertainty and Time
Presentation prepared for the “Keynes Seminar”, Robinson
College, University of Cambridge, 24th November 2009
By
Giuseppe Fontana
Contents
1 Introduction: Money, Uncertainty and Time
Part I: Keynes, the 'Classics' and the Modern Keynesian Dissent
2 The Historical Development of Dissent in Keynesian Economics
3 Methodology and Economic Theory in Keynes's General Theory
Part II: From Rationality to Unemployment and the Monetary Circuit
4 A Two-Dimensional Theory of Probability and Knowledge
5 Uncertainty and Money
Part III: Understanding Endogenous Money
6 Hicks as An Early Precursor of Endogenous Money Theory
7 Horizontalist and Structuralist Analyses of Endogenous Money
8 A General Theory of Endogenous Money
2
Introduction
• Keynes and Keynesian Economics
– Proposition 1: the Possibility of Involuntary
Unemployment
– Proposition 2: the Principle of Effective Demand
– Proposition 3: the Principle of Policy Effectiveness
• The Changing Nature of the Keynesian
Dissent
– First Principles: Money, Uncertainty and Time
– Theory plus Methodology
3
Keynes, the 'Classics' and the
Modern Keynesian Dissent
• Chapter 2: The Historical Development of
Dissent in Keynesian Economics
– The Origins of Post Keynesian Economics
– The Romantic Age: The Search for a Grand
Theoretical System
– The Age of Uncertainty: The Search for an
Alternative Methodology
4
Keynes, the 'Classics' and the
Modern Keynesian Dissent
• Chapter 3: Methodology and Economic
Theory in Keynes's General Theory
– Keynes’s Method: Chapter 18 of the
General Theory
– Keynes versus the ‘Classics’: Scope and
Method of Economics
– Mr Keynes and the ‘Classics’ in Prospect
5
From Rationality to Unemployment
and the Monetary Circuit
• Chapter 4: A Two-Dimensional Theory of
Probability and Knowledge
– Probability Theory and Forms of Knowledge
– On the Nature of Uncertainty
– Paul Davidson and Non-ergodic / Monetary
Post Keynesians on Uncertainty
6
7
From Rationality to Unemployment
and the Monetary Circuit
• Chapter 5: Uncertainty and Money
– Uncertainty2, Money, and Involuntary
Unemployment
– Uncertainty1, Money, and the
Production Process
8
9
10
Understanding Endogenous Money
• Chapter 6: Hicks as an Early Precursor of
Endogenous Money Theory
– “Monetary theory is in ‘history’ ”: An
Analytical and Historical Question
– Single Period Theory vs. Continuation
Theory
– Time and Method in Endogenous Money
Theory
11
Understanding Endogenous Money
• Chapter 7: Horizontalist and Structuralist
Analyses of Endogenous Money
– The Horizontalist Analysis of Endogenous
Money:
• Loans Create Deposits > Deposits Make Reserves
– The Structuralist Analysis of Endogenous
Money
• Liquidity preference of the household sector
• Liquidity preference of the business sector
• Liquidity preference of the commercial bank sector
12
13
14
Understanding Endogenous Money
• Chapter 8: A General Theory of
Endogenous Money
– Controversial Issues
• The market for monetary reserves
• The credit market
• The financial markets
– A Single Period-Continuation Interpretation
of the Controversial Issues
15
16
17
18