Monetary Mechanics: A Financial View

Levy Economics Institute, Working Paper No. 799

38 Pages Posted: 9 May 2014

Date Written: May 6, 2014


This paper develops the framework of analysis of monetary systems put together by authors such as Macleod, Keynes, Innes, and Knapp. This framework does not focus on the functions performed by an object but rather on its financial characteristics. Anything issued by anybody can be a monetary instrument and any type of material can be used to make a monetary instrument, as these are unimportant determinants of what a monetary instrument is. What matters is the existence of specific financial characteristics. These characteristics lead to a stable nominal value (parity) in the proper financial environment. This framework of analysis leads the researcher to study how the fair value of a monetary instrument changes and how that change differs from changes in the value of the unit of account. It also provides a road map to understanding monetary history and why monetary instruments are held.

Keywords: Monetary Instrument, Money, Fair Value, Unit of Account

JEL Classification: E5, E42, E44

Suggested Citation

Tymoigne, Eric, Monetary Mechanics: A Financial View (May 6, 2014). Levy Economics Institute, Working Paper No. 799, Available at SSRN: or

Eric Tymoigne (Contact Author)

Lewis & Clark College ( email )

0615 SW Palatine Hill Road
Portland, OR 97204
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics