Reconstructing the Quantity Theory (I)

28 Pages Posted: 26 Jul 2011 Last revised: 23 Feb 2015

See all articles by Egmont Kakarot-Handtke

Egmont Kakarot-Handtke

University of Stuttgart - Institute of Economics and Law

Date Written: July 26, 2011


The quantity theory is disjunct to the hard core of general equilibrium theory. It does not relate to the formal foundations of standard economics and, vice versa, from the behavioral axioms of standard economics a rationale for using money cannot be derived. The present paper leaves the standard axioms aside and reconstructs the quantity theory from entirely new structural axiomatic foundations. This yields a coherent view of the interrelations of quantity of money, transaction money, saving-dissaving, liquidity-illiquidity, rates of interest, leverage, allocation, prices, profits, unit of account, and employment.

Keywords: new framework of concepts, structure-centric, axiom set, money– credit symmetry, endogeneity, accommodation, neutrality, store of value, full gold-backing, declarative changes of the unit of account, contract equation, perfect inflation–deflation, real balance effect

JEL Classification: E10, E20, E40

Suggested Citation

Kakarot-Handtke, Egmont, Reconstructing the Quantity Theory (I) (July 26, 2011). Available at SSRN: or

Egmont Kakarot-Handtke (Contact Author)

University of Stuttgart - Institute of Economics and Law ( email )

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