J. S. Mill, W. Roscher and D. H. Robertson: The Early History of the Monetary Misperceptions Hypothesis

Center for the History of Political Economy at Duke University Working Paper Series, 2021

49 Pages Posted: 18 Nov 2021 Last revised: 6 Jan 2022

Date Written: November 1, 2021

Abstract

Around 50 years ago, Edmund Phelps and Robert Lucas proposed an answer to the question why changes in aggregate nominal spending bring about output and employment effects, instead of purely proportional variations in prices. The Phelps-Lucas monetary misperception hypothesis asserted that imperfect information about the state of the economy may cause sluggish price or wage adjustment to emerge as reactions to monetary shocks in an otherwise perfectly flexible prices economy. The present paper documents how J. S. Mill, W. Roscher, and D. H. Robertson addressed that issue in their respective notions of “general delusion,” “generally prevailing error” and “monetary misapprehension,” formulated between the mid-19th and early 20th centuries. It also discusses how their contributions were not generally acknowledged until after Phelps and Lucas.

Keywords: monetary misperceptions, J. S. Mill, Roscher, D. H. Robertson, misinformation

JEL Classification: B3, E3

Suggested Citation

Boianovsky, Mauro, J. S. Mill, W. Roscher and D. H. Robertson: The Early History of the Monetary Misperceptions Hypothesis (November 1, 2021). Center for the History of Political Economy at Duke University Working Paper Series, 2021, Available at SSRN: https://ssrn.com/abstract=3954254 or http://dx.doi.org/10.2139/ssrn.3954254

Mauro Boianovsky (Contact Author)

Universidade de Brasilia ( email )

Brasilia, DF 70910-900
Brazil

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