Who coined Liquidity Trap?

["bflash" <bperry@xxxxxxxxx>]

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The Question

When and where did the term "liquidity trap" first appear (notice the
difference with Keynes' term 'liquidity preference')?


The Answer

You are right to note that the term "liquidity trap" does not appear in
Keynes' General Theory. However, the term did emerge from the discussion of
Keynes' notion that the interest rate could be "sticky," and hence, unable
to fall to a level sufficient to induce enough investment to eliminate
unemployment.

D.H. Robertson introduced the term "liquidity trap" in 1940, although both
R.G. Hawtrey (1937) and Jacob Viner (1936) had noted the possibility of the
banking system allowing reserves to build up for awhile, thereby preventing
the smooth transformation of savings into investment. A good synopsis of the
story is found in Laidler (1999).

References:

Hawtrey, R.G. (1937) Capital and Employment. London: Longman.

Laidler, D. (1999) Fabricating the Keynesian Revolution. Cambridge:
Cambridge University Press.

Robertson, D.H. (1940) 'Mr. Keynes and the Rate of Interest', in Essays in
Monetary Theory, 11-44. London: Staples Press.

Viner, J. (1936) 'Mr. Keynes on the Causes of Unemployment', Quarterly
Journal of Economics 51, November: 147-67.