Markets, Money and Capital: Hicksian Economics for the Twenty First Century
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Sir John Hicks (1904-89) was a leading economic theorist of the twentieth century, and along with Kenneth Arrow was awarded the Nobel Prize in 1972. His work addressed central topics in economic theory, such as value, money, capital and growth. An important unifying theme was the attention for economic rationality 'in time' and his acknowledgement that apparent rigidities and frictions might exert a positive role as a buffer against excessive fluctuations in output, prices and employment. This emphasis on the virtue of imperfection significantly distances Hicksian economics from both the Keynesian and Monetarist approaches. Containing contributions from distinguished theorists in their own right (including three Nobel Prize winners), this volume examines Hicks's intellectual heritage and discusses how his ideas suggest a distinct approach to economic theory and policy making. It will be of great interest to scholars and students of economic theory and the history of economic thought.
point of view of market risk, is the current market value. Probabilities that the market will go up or down should be broadly the same in a liquid, efficient market. The distribution curve is thus symmetric around the mean, although tail events tend to be fatter than in a normal curve. After standardization, market risk can therefore be approximated by a normal-type distribution, centered around the origin, with somewhat fatter tails (see figure 13.3, line ‘Market risk’). The situation is very
just after, that of the neoclassical economists, Meade, Samuelson, Modigliani, and Robert Solow, and that of the post-Keynesians, Kaldor, Robinson, Kahn, and Pasinetti. A number of implications drawn from other parts of Hicks’s Capital and Growth may, however, be inferred from, and successfully integrated into, steady-state growth theory. For instance, the hypothesis of a differentiated rate of growth for the capital stock of the two classes is particularly appealing in this context, or,
utility ‘Mr Keynes and the “Classics”,’ 54, 58, 61 multi-class, growth model, 302 multi-currency economy, 186–7, 189, 192, 199, 200–2 multiple equilibria, and the trade cycle, 333 multiple equilibria, in trade cycle theory, 31, 335 multiplicative assumption, and autonomous investment, 32, 335 multiplier, 63, 210, 365, 383dynamic, 333 negative freedom, 5–6, 9see also positive freedom neutrality, and non-neutrality, of technical change, 54, 362 neo-Austrian capital theory, 349
and Emiliano Vendittelli for invaluable research assistance; and Mauro Baranzini, Roger Backhouse, Daniele Besomi, Victoria Chick, Guido Erreygers, Omar Hamouda, Donald Moggridge, Nerio Naldi, Tiziano Raffaelli, Alessandro Roncaglia, and Annalisa Rosselli for comments, suggestions, and help in clarifying various matters. We are also particularly indebted to Sue Howson for her precious help in reconstructing the events and circumstances referred to in the letters. For the relevant information
interest alters the whole structure of relative prices in a manner that has no analogue in the static model. Even more marked are the differences that arise when Hicks runs the model as a sequence of temporary equilibria. Initially relative prices are set by expectations, and could in principle take any values. In fact, they are restricted by the condition that they must not allow for unbounded plans to take advantage of strange price values. As time moves on, agents experience current prices,