Re: GROSS SUBSTITUTION

[dequech@xxxxxxxxxxxxxx]

Dear Kazuhiro and others,

Although the question was addressed to Paul, may I give my humble opinion?
A low elasticity of production in Keynes's sense should not be taken to
mean that the quantity of money cannot be increased, either exogenously or
endogenously. It merely means that very little or no labour can be employed
to produce money.
In case you're interested, I made this point in my paper "Another look at
wage and price flexibility as the solution to unemployment", in Davidson
and Kregel (eds.) (1999), Full Employment and Price Stability in a Global
Economy, Aldershot, Edward Elgar.

I think that the difference between endogenous and exogenous money is not
very important in this particular respect, since a lot more labour will not
be employed to "produce" endogenous money than to "produce" exogenous
money. Of course the difference is very important in other respects.

Cheers,
David Dequech

At 14:29 06/03/2001 +0900, you wrote:
>Paul
>
>I have wanted to ask you this question. B. Moore said in his book,
Horizontalists and Verticalists, "zero elasticities
>of production or substitution by the private sector obviously do not apply
to credit money". I think that Moore's
>statement is very reasonable, if we are in credit money economy, not
commodity money economy.
>What do you think ??
>
> **************************************
>  Kazuhiro Kurose
>  Graduate School of Economics and Business
>  Administration, Hokkaido University
>  Kita 9 Nishi 7, Kita-Ku, Sapporo, Japan
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