Problems With Monetary-disequilibrium Theory
1. According to Yeager, monetary-disequilibrium is a part of the monetarist tradition which states that "money matters the most" which cannot be true as in terms of economic analysis actors matters most.
2. The static definition of equilibrium at the heart of monetary-disequilibrium theory is flawed as he uses a very neoclassical definition on the macro-economic level i.e. he basically talks about constant price level.
3. Yeager does not take into consideration that business cycles start not just with monetary-disequilibrium but happens when that disequilibrium enters the market for lonable funds and produces disequilibrium there, such that the supply of lonable funds exceeds real savings.
4. As the name suggests the monetary-disequilibrium theory is a strictly monetary explanation of a set of economic phenomenon. It does not take into account the real economic factors like real savings or market processes that influence business cycles.
Read more about this topic: Monetary-disequilibrium Theory
Famous quotes containing the words problems and/or theory:
“The man who is forever disturbed about the condition of humanity either has no problems of his own or has refused to face them.”
—Henry Miller (1891–1980)
“[Anarchism] is the philosophy of the sovereignty of the individual. It is the theory of social harmony. It is the great, surging, living truth that is reconstructing the world, and that will usher in the Dawn.”
—Emma Goldman (1869–1940)