Menu Expand

Theoretical Principles of the Buffer Mechanism, Monetary Quasi-Equilibrium and its Spillover Effects



Knoester, A. Theoretical Principles of the Buffer Mechanism, Monetary Quasi-Equilibrium and its Spillover Effects. Credit and Capital Markets – Kredit und Kapital, 17(2), 243-260.
Knoester, Anthonie "Theoretical Principles of the Buffer Mechanism, Monetary Quasi-Equilibrium and its Spillover Effects" Credit and Capital Markets – Kredit und Kapital 17.2, 1984, 243-260.
Knoester, Anthonie (1984): Theoretical Principles of the Buffer Mechanism, Monetary Quasi-Equilibrium and its Spillover Effects, in: Credit and Capital Markets – Kredit und Kapital, vol. 17, iss. 2, 243-260, [online]


Theoretical Principles of the Buffer Mechanism, Monetary Quasi-Equilibrium and its Spillover Effects

Knoester, Anthonie

Credit and Capital Markets – Kredit und Kapital, Vol. 17 (1984), Iss. 2 : pp. 243–260

3 Citations (CrossRef)

Additional Information

Article Details

Knoester, Anthonie

Cited By

  1. Towards a disequilibrated macroeconomics

    Howitt, Peter

    The European Journal of the History of Economic Thought, Vol. (2024), Iss. P.1 [Citations: 0]
  2. Money, the balance of payments and economic policy

    Knoester, Anthonie | Sinderen, Jarig Van

    Applied Economics, Vol. 17 (1985), Iss. 2 P.215 [Citations: 5]
  3. Economic Modelling in the OECD Countries

    Two recent trends combined in an econometric model for the Netherlands: the supply-side and sectoral approach

    Verbruggen, Johan P.

    1988 [Citations: 0]


  1. Barro, R. J. and H. I. Grossman: “A General Disequilibrium Model of Income and Employment”. A.E.R. 61 (March 1971): 82 - 93.  Google Scholar
  2. Benassy, J. P.: “Neo-Keynesian Disequilibrium Theory in a Monetary Economy”. Rev. Econ. Studies 42 (October 1975): 503 - 23.  Google Scholar
  3. Benassy, J. P.: “Cost and Demand Inflation Revisited: A Neo- Keynesian Approach”. Libraire Droz, Geneva (1978): 113 - 33.  Google Scholar
  4. Brunner, K. and A. H. Meltzer: “The Place of Financial Intermediairies in the Transmission of Monetary Policy”. A.E.R. 53 (May 1963): 372 - 82.  Google Scholar
  5. Cagan, Ph.: Determinants and Effects of Changes in the Stock of Money 1875 - 1960. New York, 1965.  Google Scholar
  6. Clower, R.: “The Keynesian Counterrevolution: A Theoretical Appraisal”. In: The Theory of Interest Rates, editedbyF.H. Hahn and F.P.R. Brechling, London, 1965.  Google Scholar
  7. Eckstein, O. and G. Fromm: “The Price Equation”. A.E.R. 58 (December 1968): 1159- 83.  Google Scholar
  8. Friedman, M. and A. J. Schwartz: A Monetary History ofthe United States, 1867 - 1960. Princeton University Press, 1963.  Google Scholar
  9. Grossman, H. I.: “Money, Interest and Prices in Disegüuilibrium”. J.P.E. 79 (September/Oktober 1971): 943 - 61.  Google Scholar
  10. Gurley, J. G. and E. S. Shaw: Money in a Theory of Finance. Brookings Institution, Washington, D.C., 1960.  Google Scholar
  11. Hayek, F. A. von: Monetary Theory and the Trade Cycle. London/Toronto, 1933.  Google Scholar
  12. Hendershott, P. H. and F. De Leeuw: “Free Reserves, Interest Rates and Deposits, a Synthesis”. J. of Fin. (June 1970): 599 - 613.  Google Scholar
  13. De Jong, F. J.: Developments of Monetary Theory in the Netherlands. Rotterdam University Press, 1973.  Google Scholar
  14. Jaffee, Dw. M.: Credit Rationing and the Commercial Loan Market. New York, 1971.  Google Scholar
  15. Jaffee, Dw. M. and F. Modigliani: “A Theory and Test of Credit Rationing”. A.E.R. 59 (December 1969): 850 - 72.  Google Scholar
  16. Jaffee, Dw. M. and T. Russell: “Imperfect Information, Uncertainty, and Credit Rationing”. .J.E. (November 1976): 651 - 66.  Google Scholar
  17. Knoester, A.: “Een stelsel monetaire vergelijkingen ten behoeve van een empirisch macro-model voor Nederland”. Maandschrift Economie 38 (juli 1974): 473 - 530.  Google Scholar
  18. Knoester, A.: “On Monetary and Fiscal Policy in an Open Economy”. De Economist 127 (No. 1, 1979): 105 - 42.  Google Scholar
  19. Knoester, A.: Over geld en economische politiek, Leiden/Antwerpen, 1980.  Google Scholar
  20. Knoester, A. and J. van Sinderen: Economic Policy and Employment, Discussionpaper 8201, Dutch Ministry of Economic Affairs, The Hague. To be published in A. Maddison and B. S. Wilpstra (eds.), Unemployment: a Dutch perspective, The Hague, 1982.  Google Scholar
  21. Koopmans, J. G.: “Zum Problem des ‘neutralen’ Geldes”. In: Beiträge zur Geldthecrie, edited by F. A. von Hayek. Vienna, 1933.  Google Scholar
  22. Korteweg, P.: “Over de beheersbaarheid van de geldhoeveelheid in Nederland”. De Economist 121 (1973): 273 - 99.  Google Scholar
  23. Korteweg, P. and P. D. Van Loo: The Market for Money and the Market for Credit. Leiden, 1977.  Google Scholar
  24. Leeuw, F. deand E. M. Gramlich: “The Federal Reserve MIT Econometric Model”. Fed. Res. Bulletin (January 1968): 472 - 91.  Google Scholar
  25. Loo, P. D. van: “On the Microeconomic Foundations of Bank Behaviour in Macroeconomic Models”. Institute for Economic Research, Discussion Paper Series (7901/M). Erasmus University Rotterdam, 1979.  Google Scholar
  26. Meade, J. E.: The Theory of International Economic Policy, Volume 1, The Balance of Payments. London, 1951.  Google Scholar
  27. Meade, J. E.: “The Meaning of ‘Internal Balance’”. Econ. J. 88 (September 1978): 423 - 35.  Google Scholar
  28. Meigs, A. J.: Free Reserves and the Money Supply, Chicago, 1962.  Google Scholar
  29. Mundell, R. A.: International Economics. New York/London, 1968.  Google Scholar
  30. Negishi, T.: “Market Clearing Processes in a Monetary Economy”. In: The Theory of Interest Rates, edited by F. H. Hahn and F. P. R. Brechling. London, 1965.  Google Scholar
  31. Patinkin, D.: Money Interest and Prices; an Integration of Monetary and Value Theory. Evanston, Illinois, 1956.  Google Scholar
  32. Rutten, F. W.: “Over de macro-economische politiek tijdens de zestiger jaren”. In: Economie dezer dagen, edited by W. Begeer, L. H. Klaassen and J. R. Zuidema.  Google Scholar
  33. Rotterdam University Press, 1973. Siebrand, J. C.: Towards Operational Disequilibrium Macro-Economics. The Hague/Boston/London, 1979.  Google Scholar
  34. Spencer, R. W.: “Channels of Monetary Influence, a Survey”. Fed. Res. Bank of St. Louis Rev. (November 1974).  Google Scholar
  35. Tobin, J.: Essays in Economics, Volume 1: Macroeconomics. Amsterdam/ London, 1971.  Google Scholar
  36. Tucker, D. P.: “Credit Rationing, Interest Rate Lags, and Monetary Policy Speed”. Q.J.E. 82 (1968): 54 - 84.  Google Scholar
  37. Wicksell, K.: Interest and Prices, a Study ofthe Causes Regulating the Value of Money. London, 1936.  Google Scholar
  38. Willms, M.: “Controlling Money in an Open Economy: The German Case”. Fed. Res. Bank of St. Louis Rev. (April 1971): 10 - 27.  Google Scholar


Theoretical Principles of the Buffer Mechanism Monetary Quasi-Equilibrium and its Spillover Effects

In this paper we argue that present-day monetary theory - such as the portfolio balance approach and the wealth adjustment theory - incorrectly neglects the insights of modern disequilibrium analysis. However, this ommision may be of fundamental importance for our judgement on macroeconomic policy. Therefore, we try to develop a theoretical framework to bridge this gap. In this respect we discuss the buffer mechanism. Its main characteristic is that a situation of monetary excess capacity evolves non-price quantity adjustments in financial assets. By way of this equilibrating mechanism tendencies will arise towards a new ex post equilibrium. Together with the classical price mechanism it results in a type of a situation which we call “monetary quasi-equilibrium”. This monetary quasi-equilibrium implies a subsequent transmission channel of monetary impulses to the real sector, namely the spillover of monetary excess capacity.