IDEAS home Printed from https://ideas.repec.org/p/ris/sraffa/0043.html
   My bibliography  Save this paper

A Neglected Route to Krugman’s Liquidity Trap Revival

Author

Listed:
  • Di Bucchianico, Stefano

    (University of Siena)

Abstract

Krugman’s 1998 seminal model that revived the liquidity trap theory stimulated a debate on its origins in and differences with respect to Keynes and Hicks’s insights. The present paper illustrates and comments on a neglected line of thought innervating Krugman’s model, which hinges on the presence of a negative natural rate of interest. This result is argued to en-sue from theoretical premises analogous to those present in Samuelson’s 1958 article on the overlapping generations model. In turn, Samuelson obtained a negative equilibrium interest rate by opportunely recasting Böhm-Bawerk’s three causes for a positive rate of interest.

Suggested Citation

  • Di Bucchianico, Stefano, 2020. "A Neglected Route to Krugman’s Liquidity Trap Revival," Centro Sraffa Working Papers CSWP43, Centro di Ricerche e Documentazione "Piero Sraffa".
    • Handle: RePEc:ris:sraffa:0043
    as

    Download full text from publisher

    File URL: http://www.centrosraffa.org/cswp_details.aspx?id=46
    File Function: Full text
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    three causes for a positive rate of interest; liquidity trap; negative natural rate of interest; Krugman; Samuelson;
    All these keywords.

    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • B30 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:sraffa:0043. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Saverio M. Fratini (email available below). General contact details of provider: https://edirc.repec.org/data/sraffit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.