%0 Journal Article
%T Ramsey¡¯s Belief and the Plausibility of Keynesian Economics
%A Masayuki Otaki
%J Theoretical Economics Letters
%P 725-729
%@ 2162-2086
%D 2015
%I Scientific Research Publishing
%R 10.4236/tel.2015.56084
%X Using Ramsey¡¯s formulation of the probability theory, this study
considers the plausibility of alternative monetary theories¡ªKeynesian and
monetarism, which is defined by the people¡¯s confidence in such theories. It is
naturally assumed that the more complicated theory entails a dearer cost to
understand. Keynesian equilibrium is supported only through belief in the
stable intrinsic value of money. Conversely, monetarism requires that laypeople
have special and difficult knowledge so as to be confident about its assertion;
namely, the linear relationship between nominal money supply and price; the
actual value of Marshallian</span><i><span style=\"font-family:Verdana;\"> k</span></i><span style=\"font-family:Verdana;\"> and the
volume of nominal money supply. As such, the Keynesian belief is far more
prevalent in the actual economy.
%K Ramsey¡¯s Belief
%K Keynesian Economics
%K Monetarism
%K Plausibility
%K Equilibrium Selection
%U http://www.scirp.org/journal/PaperInformation.aspx?PaperID=61831