Journal Article Interest Rates, Forced Saving, and Prices in the Long Run Get access Jürg Niehans Jürg Niehans University of Zurich Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 32, Issue 4, October 1965, Pages 327–338, https://doi.org/10.2307/2295839 Published: 01 October 1965

Introduction, 349. — I. The two class model, 351. — II. The one class model: diminishing returns, 358. — III. The one class model: infinite growth with constant returns, 365. — Concluding remarks, 370

The paper examines the adjustment of the exchange rate and domestic prices to a monetary change under flexible exchange rates. The emphasis is on the dynamic interaction between the classical stock aspects, stressed by the monetary approach, and the flow aspects, stressed by the elasticity approach. It is shown that even in a very simple model of lagged asset adjustment the interaction between trade and capital flows can produce a large variety of adjustment paths, with and without overshooting, monotonic and cyclical.