It has been shown that, in the Patinkin model--where real balances appear in the utility function--the traditional Slutsky results are lost. Here, it is argued that work by Baumol, Tobin, Patinkin, and others implies that the utility function is separable in a specific way. It is then shown that, if the utility function is separable in that way, then the traditional Slutsky results are reinstated.

The Equivalence of the Liquidity Preference and Loanable Funds Theories and the New Stock-Flow Analysis Get access Cliff L. Lloyd Cliff L. Lloyd Khartoum Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 27, Issue 3, June 1960, Pages 206–209, https://doi.org/10.2307/2296083 Published: 01 June 1960