Cumulative Process Models from Thornton to Wicksell

Economic Review, Vol. 72, No. 3, May/June 1986, pp. 18-25

8 Pages Posted: 24 Oct 2012

See all articles by Thomas M. Humphrey

Thomas M. Humphrey

Federal Reserve Banks - Federal Reserve Bank of Richmond

Abstract

The celebrated Wicksellian theory of the cumulative process is a landmark in the history of monetary thought. It gave economists a dynamic, three-market (money, credit, goods) macromodel capable of showing what happens when banks, commercial or central, hold interest rates too low or too high. With it one could trace the sequence of events through which money, interest rates, borrowing, spending, and prices interact and evolve during inflations or deflations. The prototype of modern interest-pegging models of inflation, it influences thinking even today.

Suggested Citation

Humphrey, Thomas M., Cumulative Process Models from Thornton to Wicksell. Economic Review, Vol. 72, No. 3, May/June 1986, pp. 18-25, Available at SSRN: https://ssrn.com/abstract=2120576

Thomas M. Humphrey (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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