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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. https://doi.org/10.3790/ccm.17.2.243
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. https://doi.org/10.3790/ccm.17.2.243
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] https://doi.org/10.3790/ccm.17.2.243

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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

1 Citations (CrossRef)

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Knoester, Anthonie

Cited By

  1. Money, the balance of payments and economic policy

    Knoester, Anthonie

    Sinderen, Jarig Van

    Applied Economics, Vol. 17 (1985), Iss. 2 P.215

    https://doi.org/10.1080/00036848500000019 [Citations: 5]

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Abstract

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.