2019 年 1 巻 p. 115-134
This paper re-examines Hicks’s monetary theory, comparing it with Keynes’s theory, and offers a reading that bears out the conceptions of, “spectrum of liquidity” and “balance sheet equilibrium”. Hicks’s theory is summarized in three points; (1) “spectrum of liquidity”, (2) “balance sheet equilibrium”, and (3)“sequential financial policies”. However, in my opinion he did not consolidate these conceptions within a single integrated monetary theory.
I redefine Hicks’s concept of “spectrum of liquidity” according to the length of time within which investors expect to obtain steady cash flows from their investments. The “balance sheet equilibrium” is understood as a sequential balanced investment in various financial and industrial assets. Moreover, I recommend sequential financial policies, short-term policies, as well as medium-term and long-term policies, in order to stabilize fluctuation and minimize risks in financial assets and real assets markets.
I set up an analytical model used to examine a new interpretation of Hicks’s monetary theory, titled the “Frontier of Finance Model” (FFM). I reconstruct Hicks’s “balance sheet equilibrium” in this model and show how the financial system has evolved in economic history along a trajectory of financial and industrial investment.