THEORIES ON THE MONEY NON-NEUTRAL NATURE AND DE-MONOPOLIZATION

• Main Authors: MADALINA RADOI, ALEXANDRU OLTEANU
• Format: Article
• Language: English
• Published: Nicolae Titulescu University 2014-11-01
• Series: Global Economic Observer
• Subjects: money neutrality; Phillips curve; invariable currency; money de-monopolization; interbanking clearing
• Online Access: http://www.globeco.ro/wp-content/uploads/vol/split/vol_2_no_2/geo_2014_vol2_no2_art_019.pdf
• ISSN: 2343-9742; 2343-9750

At the beginning of the 90’s there was a consensus as to the vital theoretical matters on monetary policy with the result that currently there are few diverging points regarding the fact that a modification in the money offer generates, on a short term, significant consequences on production, while, on a long term, it influences prices. Consequently, the idea that money is neutral on a long term has been accepted, this position being adopted especially by Austrian monetary specialists. Such conclusions were triggered by the divergent points on Phillips curve on the basis of several long debates between Keynesian supporters, monetarists and theoreticians of rational prevention. As it is well known, Phillips curve is an inverse relationship between inflation and unemployment, whose stability on a long term determined the UK Keynesian economists to regard this curve as the equation missing from the Keynesian model, i.e. the one which links price production and occupation modifications. The curve has also been adopted in the USA by Paul Samuelson and Robert Solow, where it seemed to be valid at the beginning of the ‘60s.