Re: Equilibrium & Market Clearing

["eperez" <eperez@xxxxxxxxx>]

1) There are important differences between Sraffians (NR) and other
 PKs. For Sraffians,

(i) Uncertainty is akin to a market imperfection (similar to wage
rigidity).

(ii) Liquidity preference can be formally separated from Keynes´s
theory of effective demand. "..does not carry us very far". Nothing in
Keynes theory explains the conventional rate of interest (Garegnani-
Robertson argument). Keynes´s argument can do without liquidity
preference.

(iii) The quantity theory: once it is realized that the essence of the
QT is about the determination of the level of output, not about
money, and that the capital controversies demonstrated the
inconsistency in determining Y, the exogenous-endogenous money
supply debate is irrelevant for a critique of QT or monetarism. If in
the QT equation Y can not be determined by supply and demand,
the quantity theory is irrelevant.

2) To some extent these differences are irreconciliable especially if
one takes into account the "sistematic, persistent and permanent
forces" on which the Sraffian approach to methodology is based.
Should one drop the analysis of long period positions (as I think
Roncaglia has suggested)?.

3) There is however common ground between Sraffians and other
PKs on the relation between monetary and real variables. The
money rate of interest determines the MECs and the rate of profit
(Pivetti, Roncaglia). In Pivetti the long run money rate of interest in
exogenous and can respond either to internal debt considerations
or foreign exchange developments.

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Esteban Pérez
Economic Affairs Officer
Economic Commission for Latin America and the Caribbean
United Nations
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E-mail address: eperez@xxxxxxxxx
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