Supplementary Files
Keywords
MONEY-ELASTICITY
THRIFT
PROFIT
INTEREST
INFLATION
HAYEK
ELASTICIDAD DEL DINERO
AHORRO
GANANCIA
TASA DE INTERÉS
INFLACIÓN
How to Cite
Abstract
There is much literature and discussion on the topic of economic growth and money supply given the numerous points of view that exist. In the thick of the COVID-19 pandemic, policymakers and prominent economists looked to revive employment, investment, and production and to tame rising inflation. Monetary and fiscal policies promoted prior to the outbreak of COVID-19 seem to be the core issue. This essay examines Hayek’s critical assumptions on the effects of the money supply on both the volume and direction of output through production structure, prices, and interest rates. We provide a theoretical model to analyze essential macroeconomic variables and to discover new formulas to measure economic trends and forecast the interest rate at any given instant. Analyzing data from the United States of America according to the Bureau of Economic Analysis (BEA) and the Federal Reserve (Fed), the results suggest that one year ago the Fed should have aimed for an interest rate of approximately four percent (4.0%). In the Addendum to this paper, we include a table demonstrating the usefulness of the proposed model when dealing with steady economic growth.
References
Bernanke, B. (2022). 21st Century Monetary Policy: The Federal Reserve from the Great inflation to Covid-19. W.W. Norton and Company.
Branson, W. (1988). Macroeconomic theory and policy (2nd ed.). Universal Book Stall.
Einstein, A. (1920). On the electrodynamics of moving bodies. University of Calcuta.
Fisher, I. (1930). The theory of interest. The MacMillan Company.
Friedman, M. (1960). A Program for Monetary Stability. Fordham University Press.
Friedman, M. (1982). Monetary Policy: Theory and Practice. Journal of Money, Credit and Banking, 14(1), 98–118. https://doi.org/10.2307/1991496
Gottfried, H. (1946). Prosperity and depression. United Nations.
Hayek, F. A. (1931). The "Paradox" of saving. Economica, (32), 125–169. https://doi.org/10.2307/2547921
Hayek, F. A. (1932a). A Note on the Development of the Doctrine of "Forced Saving". The Quarterly Journal of Economics, 47(1), 123–133. https://doi.org/10.2307/1885188
Hayek, F. A. (1932b). Reflections on the pure theory of money of Mr. J. M. Keynes. Economica, (33), 270–295. https://doi.org/10.2307/2548035
Hayek, F. A. (1932c). Reflections on the pure theory of money of Mr. J. M. Keynes (continued). Economica, (35), 22–44. https://doi.org/10.2307/2548974
Hayek, F. A. (1933). Monetary theory and the trade cycle. Sentry Press.
Hayek, F. A. (1935). Prices and production (2nd ed.). M. Kelly.
Hayek, F. A. (1975). Profits, interest and investment (Reprint of the 1939 ed.). Augustus M, Kelley.
Hayek, F. A. (2009). The pure theory of capital. Mises Institute printing. (Original work published 1931).
Kaldor, N. (1943). [Review of Fiscal Policy and Business Cycles, by A. Hansen]. The Economic Journal, 53(209), 107–111. https://doi.org/10.2307/2226302
Kashkari, N. (2021, February 04). We need a long-haul stimulus that will last as long as the pandemic does. Washinton Post. https://web.archive.org/web/20221108210818/https://www.washingtonpost.com/opinions/2021/02/04/we-need-long-haul-stimulus-that-will-last-long-pandemic-does/
Kelton, S. (2020). The Déficit Myth: Modern Monetary Theory and the Birth of the People´s economy. PublicAffairs.
Keynes, J. M. (1930). A treatise on money. Cambridge University Press.
Keynes, J. M. (1931). [Mr. Keynes' Theory of Money]: A Rejoinder. The Economic Journal, 41(163), 412–423. https://doi.org/10.2307/2223899
Keynes, J. M. (1936). The general theory of employment, interest, and money. Macmillan.
Krugman, P. (2021, December 16.). The Year of Inflation Infamy. The New York Times. https://www.nytimes.com/2021/12/16/opinion/inflation-economy-2021.html
Krugman, P. (2022, January 21). Honey, I Shrank the Economy’s Capacity. The New York Times. https://www.nytimes.com/2022/01/21/opinion/inflation-us-economy-biden.html
Marx, K. (1986). El Capital. Formación de una tasa general de ganancia (Tasa media de ganancia) y transformación de los valores mercantiles en precios de producción). En Tomo III, Vol. VI: El Proceso global de la producción capitalista (8 va ed., 195-217). Siglo XXI.
Neisser, H. (1934). Monetary expansion and the structure of production. Social Research, 1(4), 434–457. https://www.jstor.org/stable/40981398
Robertson, D. H. (1931). Mr. Keynes' Theory of Money. The Economic Journal, 41(163), 395–411. https://doi.org/10.2307/2223898
Smialek, J. (2022, February 6). Is This What Winning Looks Like? New York Times. https://www.nytimes.com/2022/02/06/business/economy/modern-monetary-theory-stephanie-kelton.html
Smith, T. J. (2022, Abril 26). Hot job market, an economic relief, is a Wall Street Worry. The New York Times. https://www.nytimes.com/2022/04/26/business/economy/jobs-wall-street.html
Sraffa, P. (1932). Dr. Hayek on money and capital. The Economic Journal, 42(165), 42–53. https://doi.org/10.2307/2223735
Summers, L. H. (2021a, February 4). The Biden stimulus is admirably ambitious. But it brings some big risks, too. The Washington Post. https://www.washingtonpost.com/opinions/2021/02/04/larry-summers-biden-covid-stimulus/
Summers, L. H. (2021b, November 15). On inflation, it’s past time for team ‘transitory’ to stand down. The Washington Post. https://www.washingtonpost.com/opinions/2021/11/15/inflation-its-past-time-team-transitory-stand-down/
Taylor, J. B. (1993). Discretion versus policy rules in practice. Carnegie-Rochester Conference Series on Public Policy, 39, 195–214. https://doi.org/10.1016/0167-2231(93)90009-L
Villalobos Céspedes, D. (2010). Capital, Competencia y Ganancia. EUNA. https://www.euna.una.ac.cr/index.php/EUNA/catalog/book/83
Villard, H. H. (1948). Monetary Theory. In H. S. Ellis (Ed.), A Survey of Contemporary Economics (pp. 314–351). Blakiston Co.
Comments
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 Unported License.
Copyright (c) 2024 Daniel Villalobos Céspedes