Edited by Robert W. Dimand and Harald Hagemann
Chapter 16: Knut Wicksell
Although Wicksell and Keynes belonged to different generations of economists, they met twice in England (1916 and 1922), when they discussed monetary stabilization and population issues. They also corresponded in 1923, when Wicksell unsuccessfully submitted a paper on machinery and unemployment to the Economic Journal. Keynes was instrumental in getting Wicksell’s Geldzins und Güterpreise translated and published as Interest and Prices in 1936. Keynes, in his 1930 Treatise on Money, applied to his second equation of the price level Wicksell’s notion of the “natural rate of interest”, removed of its Austrian capital foundations. Unlike Wicksell, Keynes did not distinguish between cumulative changes in nominal variables and noncumulative variations in real magnitudes. In the 1936 General Theory Keynes dissociate himself from Wicksell’s natural rate of interest. Nevertheless, in the preface to the German edition, he referred to Wicksell as “the most important unorthodox [macroeconomic] discussion” in the German language.
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