Monetary Theory And Policy From Hume And Smith ... File

: If a country gains more gold (specie), its prices rise. This makes its exports expensive and imports cheap, causing gold to flow out until equilibrium is restored.

The monetary theories of David Hume and Adam Smith represent the bedrock of classical economics, establishing how money interacts with prices, trade, and banking. While they were close friends, their views on how money impacts an economy differed significantly. David Hume: The Price-Specie Flow Mechanism Monetary Theory and Policy from Hume and Smith ...

Hume’s primary contribution was the , which he used to dismantle the mercantilist obsession with hoarding gold. : If a country gains more gold (specie), its prices rise

In The Wealth of Nations (1776), Smith focused less on Hume’s international flow mechanism and more on how banking could catalyze economic growth. Monetary Theory and Policy from Hume and Smith to Wicksell While they were close friends, their views on