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WICKSELL ON THE AMERICAN CRISIS OF 1907

Published online by Cambridge University Press:  31 May 2011

MAURO BOIANOVSKY
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Abstract

The article discusses Knut Wicksell’s interpretation of the American crisis of 1907, which he presented in a piece published in Swedish in 1908. Wicksell advanced, probably for the first time in the literature, a clear distinction between the “solvency” and “liquidity” of banks, and discussed its implications for the interpretation of crises. Moreover, he called attention to a third desirable attribute of a bank: “flexibility”; that is, the ability to satisfy credit demand at an adequate rate of interest. Wicksell linked that with his better known concept of the cumulative process and the stabilization policy associated with it.

Type
Research Articles
Information
Journal of the History of Economic Thought , Volume 33 , Issue 2 , June 2011 , pp. 173 - 185
Copyright
Copyright © The History of Economics Society 2011

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