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A Technical Definition of Uncertainty and the Long-run Non-neutrality of Money

In: Inflation, Open Economies and Resources

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  • Paul Davidson

Abstract

Ever since Knight’s (1921) seminal work, some economists have drawn a distinction between uncertainty and risk — in order to demonstrate that this difference has important implications for understanding the operations of an entrepreneurial economy. Lawson (1985) is the latest to discuss the need for the analysis of ‘societal interaction’1 in an economic world where ‘[uncertainty, as opposed to mathematical risk, is a pervasive fact of life’ (p. 909). Lawson correctly associates the concept of uncertainty with the situation where there is no basis whatever upon which to form any calculable probability … Uncertainty in this account arises when the probability relation is numerically indeterminate and non-comparable to other probability relations (1985, p. 914).

Suggested Citation

  • Paul Davidson, 1991. "A Technical Definition of Uncertainty and the Long-run Non-neutrality of Money," Palgrave Macmillan Books, in: Louise Davidson (ed.), Inflation, Open Economies and Resources, chapter 15, pages 159-170, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-11516-7_15
    DOI: 10.1007/978-1-349-11516-7_15
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    Cited by:

    1. Eckhard Hein, 2005. "Finanzstruktur und Wirtschaftswachstum - theoretische und empirische Aspekte," IMK Studies 01-2005, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    2. Fusari, Angelo, 2013. "Radical Uncertainty, Dynamic Competition and a Model of the Business Cycle," MPRA Paper 74015, University Library of Munich, Germany, revised Mar 2013.
    3. Milan Sojka, 2009. "Stane se institucionální ekonomie paradigmatem 21. stoletÍ? [Will the institutional economy become the 21st century paradigm?]," Politická ekonomie, Prague University of Economics and Business, vol. 2009(3), pages 297-304.
    4. Hein, Eckhard & Dodig, Nina & Budyldina, Natalia, 2014. "Financial, economic and social systems: French Regulation School, Social Structures of Accumulation and Post-Keynesian approaches compared," IPE Working Papers 34/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    5. James Culham, 2023. "Time, equilibrium and uncertainty: Bergson and Robinson," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 47(5), pages 909-930.
    6. Hein, Eckhard, 2004. "Money, credit and the interest rate in Marx's economic. On the similarities of Marx's monetary analysis to Post-Keynesian economics," MPRA Paper 18608, University Library of Munich, Germany.
    7. Piero Ferri & Anna Maria Variato, 2007. "Macro Dynamics in a Model with Uncertainty," Working Papers (-2012) 0704, University of Bergamo, Department of Economics.
    8. Chenet, Hugues & Ryan-Collins, Josh & van Lerven, Frank, 2021. "Finance, climate-change and radical uncertainty: Towards a precautionary approach to financial policy," Ecological Economics, Elsevier, vol. 183(C).
    9. Agnieszka Barczak & Izabela Dembinska & Lukasz Marzantowicz & Katarzyna Nowicka & Katarzyna Szopik-Depczynska & Tomasz Rostkowski, 2020. "The Impact of Unpredictable Factors on the Uncertainty’s Structure in the Management of Logistics Processes," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 186-200.
    10. Shyam Gouri Suresh & Mark Setterfield, "undated". "Firm performance, macroeconomic conditions, and “animal spirits” in a Post Keynesian model of aggregate fluctuations," Working Papers 14-09, Davidson College, Department of Economics.
    11. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    12. Fontana, Giuseppe & Gerrard, Bill, 2004. "A Post Keynesian theory of decision making under uncertainty," Journal of Economic Psychology, Elsevier, vol. 25(5), pages 619-637, October.
    13. Pope, Robin & Selten, Reinhard & Kube, Sebastian, 2009. "Nominalist Heuristics and Economic Theory," Bonn Econ Discussion Papers 17/2009, University of Bonn, Bonn Graduate School of Economics (BGSE).
    14. von Hagen, Jürgen & Kube, Sebastian & Kaiser, Johannes & Selten, Reinhard & Pope, Robin, 2006. "Prominent Numbers and Ratios in Exchange Rate Determination: Field and Laboratory Evidence," Bonn Econ Discussion Papers 29/2006, University of Bonn, Bonn Graduate School of Economics (BGSE).
    15. Jan Zápal, 2005. "Evropská měnová unie z post-keynesovské perspektivy [European monetary union from post keynesian perspective]," Politická ekonomie, Prague University of Economics and Business, vol. 2005(5), pages 687-701.
    16. Stephen Dunn, 2000. "Fundamental Uncertainty and the Firm in the Long Run," Review of Political Economy, Taylor & Francis Journals, vol. 12(4), pages 419-433.
    17. Milan Sojka, 2010. "Monetární politika evropské centrální banky a její teoretická východiska pohledem postkeynesovské ekonomie [Monetary Policy of the European Central Bank and Its Theoretical Resources in the View of," Politická ekonomie, Prague University of Economics and Business, vol. 2010(1), pages 3-19.
    18. Pope, Robin & Selten, Reinhard & Kube, Sebastian & von Hagen, Jürgen, 2009. "Prominent Numbers, Indices and Ratios in Exchange Rate Determination and Financial Crashes: in Economists’ Models, in the Field and in the Laboratory," Bonn Econ Discussion Papers 18/2009, University of Bonn, Bonn Graduate School of Economics (BGSE).
    19. Bernard Shull, 1993. "The Limits of Prudential Supervision: Economic Problems, Institutional Failure and Competence," Economics Working Paper Archive wp_88, Levy Economics Institute.
    20. José Eduardo Gómez & Nidia Ruth Reyes, 2002. "El racionamiento del crédito y las crisis financieras," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 4(7), pages 62-75, July-Dece.
    21. Ivan V. Rozmainsky, 2015. "Investor myopia and persistence of the global crisis- a post Keynesian view," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 11(1), pages 107-116.
    22. Lavoie, Marc, 1992. "Éléments d’analyse d’une synthèse post-classique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 68(4), pages 607-631, décembre.
    23. Váry, Miklós, 2021. "The long-run real effects of monetary shocks: Lessons from a hybrid post-Keynesian-DSGE-agent-based menu cost model," Economic Modelling, Elsevier, vol. 105(C).

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