“According to [the general equilibrium approach to monetary theory], the principal way in which financial policies and events affect aggregate demand is by changing the valuations of physical assets relative to their replacement costs.”

— James Tobin

Source: "A general equilibrium approach to monetary theory" (1969), p. 29 As cited in: William Pool. Brookings Papers on Economic Activity, 2, (1976), p. 292

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James Tobin22

American economist 1918–2002

Rudiger Dornbusch (1942–2002) German economist

Source: Open economy macroeconomics, 1980, p. 71

“In figure 3 we show the money and domestic asset market equilibrium schedules for given stocks of each of the assets. Along MM the domestic money market is in equilibrium. Higher interest rates reduce money demand so that equilibrium requires a depreciation and thus a rise in the domestic currency value of foreign assets and - hence wealth. The exchange rate thus plays a balancing role by affecting the valuation of assets.”

Rudiger Dornbusch (1942–2002) German economist

Source: Open economy macroeconomics, 1980, p. 14

“Keynes's idea was very simple. Monetary and fiscal policy should have a single goal, jointly pursued, of maintaining a full employment level aggregate demand.”

Robert Skidelsky (1939) Economist and author

Source: John Maynard Keynes: The Return of the Master (2009), Ch. 8 : Keynes for Today

“On principle i relative prices will be lowered in the interests of external balance and domestic expenditure will be inflated in the interests of internal balance. Internal balance will be very quickly restored although there is no net change in external balance. Relative prices must, therefore, continue to be lowered, which will tend now to produce a boom at home. The inflationary financial policy must, therefore, be replaced by a deflationary policy. In the end relative prices will be substantially lowered, while there may be a small net inflation or deflation of domestic expenditure by financial policy.”

James Meade (1907–1995) British economist

Source: The balance of payments, 1951, p. 160; As cited in: Metaxas & Weber (2013, p. 22)

“With the publication of J. M. Keynes’s General Theory in 1936 and the mathematical formalizations of his theory by J. R. Hicks (1937) and others, the language of macro-economic theory became systems of simultaneous equations. These are general equilibrium systems of interdependence in the sense that the relationships describe an entire national economy, not just a particular industry or sector. The systems are usually not completely closed; they depend on exogenous parameters including instruments controlled by policy-makers. Seeking definite relationships of economic outcomes to policies and other exogenous variables, qualitative and quantitative, these models sacrifice detail and generality, limiting the number of variables and equations by aggregations over agents, commodities, assets, and time.”

James Tobin (1918–2002) American economist

Source: "Money and Finance in the Macro-Economic Process" (1982), p. 12

“General relativity is certainly a very beautiful theory, but how does one judge the elegance of physical theories generally?”

Roger Penrose book Fashion, Faith, and Fantasy in the New Physics of the Universe

Ch. 1, Mathematical Elegance as a Driving Force, p. 7 https://books.google.com/books?id=T09kCwAAQBAJ&pg=PA7. <br class="br">Fashion, Faith, and Fantasy in the New Physics of the Universe (2016)

“First and foremost, Keynesian economics is a theory of aggregate demand and of the effects of aggregate demand on real output and inflation.”

Alan Blinder (1945) economist

"The fall and rise of Keynesian economics", (1988)

“The historic terrain of macro-economic theory is the explanation of the levels and fluctuations of overall economic activity. Macro-economists have been especially interested in the effects of alternative fiscal, financial, and monetary policies.”

James Tobin (1918–2002) American economist

Source: "Money and Finance in the Macro-Economic Process" (1982), p. 12

“Probability is expectation founded upon partial knowledge. A perfect acquaintance with all the circumstances affecting the occurrence of an event would change expectation into certainty, and leave neither room nor demand for a theory of probabilities.”

George Boole (1815–1864) English mathematician, philosopher and logician

Source: 1850s, An Investigation of the Laws of Thought (1854), p. 244; Cited in: Michael J. Katz (1986) Templets and the Explanation of Complex Patterns, p. 123

“The central question for positive financial economics is valuation – what is the value today of a set of future prospective cash flows? The central question for normative financial economics is the appropriate use of financial instruments in a world in which values are set wholly or partially in accord with the principles of positive financial economics.”

William F. Sharpe (1934) American economist

William Sharpe’s February 1992 lecture at Trinity University: in: William Breit, ‎Barry T. Hirsch (2009). Lives of the Laureates: Twenty-three Nobel Economists. p. 172

“According to [the general equilibrium approach to monetary theory], the principal way in which financial policies and events affect aggregate demand is by changing the valuations of physical assets relative to their replacement costs.”

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