Money, Interest and Stagnation

This book deals with the utility of money in dynamic macroeconomic theory. Professor Ono sets out a new theoretical explanation of disequilibrium in markets, drawing on work first put forward by Keynes, but using the neoclassical theoretical tools of optimization and intertemporal models. Professor Ono investigates the phenomenon of stagnant money as an example of market disequilibrium. He argues that since the demand for money is insatiable then the economy will never reach equilibrium and persistent stagnation (i.e. money not circulating) will occur. Thus persistent stagnation has a microeconomic foundation, and is not a result of market imperfections, or imperfect knowledge leading to an expectations bias, both traditional neoclassical explanations of market disequilibrium. This work is interesting and strikingly original, drawing attention to a sound and technically plausible economic phenomenon. The book is well explained in intuitive terms, with technical material confined to subsections. Professor Ono also deals briefly with the interesting implications which his work has for macroeconomic behaviour and the efficiency of governmental policies to stimulate growth in the economy. This book is intended for academics interested in theoretical macroeconomics, especially those specializing in monetary or financial behaviour, and those concerned with the neoclassical/Keynesian debate. Also a library purchase for graduate students.