PSL Quarterly Review

Introduction

Massimo Di Matteo — 2025-10-13

Here we reproduce an unpublished essay by Luigi Spaventa written in 1958 when the author was a student at Cambridge. The work presents two sharp criticisms of the theory proposed by Patinkin in his Money, Interest, and Prices with the aim of showing how the rehabilitation of neoclassical macroeconomic theory is unconvincing.

On Professor Patinkin’s Money, Interest, and Prices

Luigi Spaventa — 2025-10-13

The purpose of this essay is to point out two errors which exist in Patinkin’s Money, Interest and Prices. The aim is to show that the rehabilitation of the neoclassical theory of money and interest is not convincing. I shall try to show that Patinkin’s refined version of the quantity theory presents the same pitfalls as the older versions; that his attack on the Keynesian theory of liquidity preference misses the point, while his theory of the demand for money and of the rate of interest is open to many objections.

From the dollar standard regime of the Plaza Accord to a crypto standard regime

Paolo Savona — 2025-10-13

Starting from the Plaza Agreement, which in 1985 proposed to regulate the functioning of the dollar standard, the international monetary system has experienced a series of evolutions following the collapse of the USSR, the development of globalization, culminating in the birth of the WTO and the growth of China, and the protectionist reversal of US foreign relations. The abnormal growth of finance resulted in the world crisis of 2008, paving the way for the emergence of Bitcoin, the private virtual currency, followed by many cryptocurrencies, which met with market approval, leading the authorities to legitimize their existence, until the Trump Administration’s statement in March 2025, which laid the foundations for a profound change in the international monetary regime from the dollar to a crypto standard.

Modeling monopoly money: The Neochartalist theory of the price level

Sam Levey — 2025-10-13

This paper formalizes the theory of price level determination from Modern Monetary Theory by building two toy models of ‘monopoly money’. Drawing inspiration from mainstream models of durable goods with monopoly producers, the government is modelled as the sole producer of its liabilities, which can then be resold in secondary markets. The steady-state results follow the MMT argument that the price level is a function of the prices paid by government when it spends; thus government spending itself is the nominal anchor that determines the price level in the short-run. The goal in presenting these results is primarily communication: by expressing MMT’s price level story in the language of mathematics, the assumptions and dynamics behind the theory become clearer, which should encourage better dialogue between different schools of thought.

Investment-led growth, employment, and income distribution: Conceptualizing a post-Keynesian employment Phillips curve dynamics in India

Satya Prasad Padhi — 2025-10-13

The present study aims at studying productivity growth, employment, and income distribution in a Young-Kaldor investment dynamics in which productivity growth and a higher markup sustaining investment are endogenous to growth and support better employment and wage outcomes. Investment-led growth requires equality of investment and profit. However, it also involves increases in wages as compensation for the increased incidence of specialized employment, which adds force to the investment-led dynamics. It is contended that empirical support for this investment-led transitional dynamics can point towards an employment Phillips curve: a positive correlation between wages and employment at given prices. A lack of dynamic evolution can indicate wage-price correlation, but without necessarily having spiral connotations, and provides alternative understandings to the price Phillips curve on which the literature focuses.