I have just posted (on the Social Science Research Network) a revised version of a paper I presented last year in Tokyo at the Ricardo Society Conference on Money, Finance and Ricardo. The paper, “Monetary Disequilibrium and the Demand for Money in Ricardo and Thornton,” will be published next year by Routledge in a forthcoming volume edited by Susumu Takenaga, containing the papers presented at the conference. Here is the abstract of my paper.
This paper attempts to provide an account of the reasons for the differences between the theories of David Ricardo and Henry Thornton for the depreciation of sterling during the Napoleonic Wars. Ricardo held that only overissue by the Bank of England could cause depreciatiaon of sterling during the Restriction while Thornton believed that other causes, like a bad harvest, could also be responsible for declining value of sterling in terms of bullion. Ricardo thought that a strict application of the conditions of international commodity arbitrage under the gold standard showed that a bad harvest could not cause a depreciation of sterling, but, applying a barter model, he failed to consider the effect of a bad harvest on the demand for money. In contrast, Thornton’s anticipation of Wicksell’s natural-rate theory did not strictly adhere to the conditions of international commodity arbitrage assumed by Ricardo, allowing for the operation of a Humean price-specie-flow mechanism, but, like Ricardo, Thornton implicitly made the untenable assumption of an unchanging demand for money.
The paper is available for download at the Social Science Research Network website. Here’s a link
Any comments or suggestions would be greatly appreciated.