Re: Controversy on interest rate

[Alan G Isaac <aisaac@xxxxxxxxxxxx>]

On Tue, 25 Jun 2002 11:11:30 +0900 Kazuhiro Kurose <kurose@xxxxxxxxxxxxxxxxxxxxxx> wrote:
> After the publication of GENERAL THEORY, the controversy on interest rate was arisen concerning to two points. In other
> words, first was whether the interest theory of liquidity preference is equivalent to that of loanable fund, and second
> was whether which is preferable if the first point should be rejected.
> According to my survey, prominent proponents to the first point were Fellner and Somers, Patinkin, who argued that both
> theories were same, and that, as for the second point, both theories were indifference. On the contrary, prominent
> opponents to the first point were Klein, Scitovszky, who argued that the former theory is different from the latter, and
> that, as for the second point, interest theory if liquidity preference is preferable.
> However, I don't know whether the controversy was clinched or it has been come to an end without any agreements.
> Then if someone knows the appropriate book or paper on the controversy, I would like you to tell me.


I expect you to get some strong replies on this list,
so I will just mention Maclachlan's book
http://www.manhattan.edu/business/ecofin/fmaclach/book.html
which has a relevant chapter,
and a couple papers by Sho-Chieh Tsiang and Abba Lerner:
Tsiang, Sho-Chieh,
"Liquidity Preference and Loanable Funds Theories, Multiplier and Velocity Analysis: A synthesis", 1956, AER.
Tsiang, Sho-Chieh,
"Walras's Law, Say's Law and Liquidity Preference in General Equilibrium Analysis", 1966, IER.
Tsiang, Sho-Chieh,
"Keynes's Finance Demand for Liquidity, Robertson's Loanable Funds Theory and Friedman's Monetarism", 1980, QJE.
Lerner, Abba P.,
"Alternative Formulations of the Theory of Interest", 1938, EJ.
Lerner, Abba P.,
"Saving Equals Investment", 1938, QJE.
Lerner, Abba P.,
"Saving and Investment: Definitions, assumptions and objectives", 1939, QJE.

Cheers,
Alan Isaac