Chapter 6 complete

6.6.2 Patinkin’s Integraton of the Monetary 
Professor Patinkin’s integration of value theory with monetary theory and with the theory of 
employment is a highly impressive architectonic accomplishment, based on a single 
fundamental idea. The idea is that of interpreting the dema
resulting from the utility or safety yielding 
analogous to the deviation of the demand for the consumer goods from their utility.
The author first incorporates the demand for real balances (mone
for the price level) into the theory of consumer choice on the level of micro analysis. Thus, 
room is made in the system for what Patinkin calls the “real balance effect’
The classical quantity theory of money maintains a dichotomy b
sector and the real sector. It (classicist) assumes that money is a neutral (the classical 
economists’ belief that changes in the money supply affect the general price level, but not 
relative price. Relative price refers to any price ex
having no influence on output, which is governed by real variables like labour, capital, and 
technology. An increase in money supply
relative prices, which are determ
dichotomy between the monetary sector and the real sector in his monumental work, “Money, 
Interes, and Prices (1965)”. He argued that dichotomy between monetary sector and real 
sector is inconsistent with the quantity theory of money.
14. William.Fellener, Patinkin’s integration of monetary and value theory”, The American Economic Review, 
Vol.46, No.5, Dec. 1956