Re: flow or stock?

[Alan G Isaac <aisaac@xxxxxxxxxxxx>]

On Fri, 02 Aug 2002 15:57:36 +0900 Kazuhiro Kurose <kurose@xxxxxxxxxxxxxxxxxxxxxx> wrote:
> Then do you think that the lonable fund theory, in which interest rate is
> thought of as a flow variable, is equivalent with the liquidity preference
> theory, in which interest rate is thought of as a stock variable? Unless
> so, it is critically important to make a distinction between a flow and a
> stock, isn't it??

This is misstated.  The interest rate is a flow variable. (E.g.,
saying the interest rate is 5%/yr makes sense, but saying the interest
rate is 5% is meaningless unless the time period is somehow implicit.)
Perhaps you mean to say that some formulations of the liquidity
preference vs.  loanable funds theories contrast interest rate
determination by asset stocks (LP) vs.  interest rate determination by
asset flows (LF).

Cheers,
Alan Isaac