Review - Interest and Prices (Wicksell)

Review Interest - The appearance of Wicksells classic work is long overdue and it is a matter of satisfaction that the undertaking has been

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The appearance of Wicksell’s classic work is long overdue, and it is a matter of satisfaction that the undertaking has been entrusted to the highly competent hands of the Mises Institute. The subject of the discount rate as an instrument of credit regulation is one which was developed in practice before it found a place in economic theory. It was evolved by the Bank of England from about 1830 onwards, and little was written about it till the time of Bagehot. Marshall was the first economist to embody it in monetary theory, and Wicksell alludes to Marshall’s submissions before the Gold and Silver Commission. Wicksell’s book was the means of introducing this theory to Continental economics. But it was not merely a channel of communication; it contained important original contributions to the subject. Of these best known is his theory of a natural rate of interest. This was logically involved in the theory that the rate of interest is the cause of changes in the price level. If a “high” rate of interest causes a fall of the
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This note was uploaded on 11/20/2010 for the course ECON 530 taught by Professor Giertz during the Spring '10 term at University of Illinois, Urbana Champaign.

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