Irving Fisher and the Quantity Theory of Money

Among Don Patinkin's many contributions to monetary theory, perhaps none is more important than his attempt to revise and restate classical monetary theory and to incorporate some of the revisions suggested by Keynes' General Theory and his own analysis. The importance of these efforts for the development of monetary theory can scarcely be underrated. However, the discussion to which he contributed so much turned increasingly toward a discussion of the real balance effect and of valid and invalid dichotomies. As a result, perhaps greater attention has been lavished on the conditions for equilibrium in an economy only slightly different from a barter (or pure exchange) economy than on the adjustment process in an economy not unlike our own.