Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If you need an accessible version of this item please contact JSTOR User Support

The Determinacy of Absolute Prices in Classical Economic Theory

W. Braddock Hickman
Econometrica
Vol. 18, No. 1 (Jan., 1950), pp. 9-20
Published by: The Econometric Society
DOI: 10.2307/1907208
Stable URL: http://www.jstor.org/stable/1907208
Page Count: 12
  • Read Online (Free)
  • Download ($10.00)
  • Cite this Item
If you need an accessible version of this item please contact JSTOR User Support
The Determinacy of Absolute Prices in Classical Economic Theory
Preview not available

Abstract

This paper takes issue with Don Patinkin, who recently argued that the simultaneous equations of classical economic theory are necessarily inconsistent, and that the classical attempt to determine real prices in the real sector of the economy and absolute prices in the monetary sector involves logical contradictions. Since a large part of his argument hinges on a misunderstanding of just what it was that the classical school assumed, the present paper restates the classical theory so as to emphasize its postulational bases. A simple example is then employed to demonstrate that it is quite possible to set up a consistent classical system in which relative prices are determined in the real sector independently of absolute prices in the monetary sector. Next the details of Patinkin's analysis are examined for the flaws that led him to believe that such a system could not be set up. The paper closes with some observations on the ways in which determinacy can be built into a system and on the generally unsatisfactory state of equilibrium theory.

Page Thumbnails

  • Thumbnail: Page 
9
    9
  • Thumbnail: Page 
10
    10
  • Thumbnail: Page 
11
    11
  • Thumbnail: Page 
12
    12
  • Thumbnail: Page 
13
    13
  • Thumbnail: Page 
14
    14
  • Thumbnail: Page 
15
    15
  • Thumbnail: Page 
16
    16
  • Thumbnail: Page 
17
    17
  • Thumbnail: Page 
18
    18
  • Thumbnail: Page 
19
    19
  • Thumbnail: Page 
20
    20