ABSTRACT
Monetary Equilibrium was an attempt to make a critical reconstruction of Wicksell's notion of a normal rate of interest so it could be used for a monetary analysis, and the starting-point was Lindahl's analysis in The Rate of Interest and the Price Level ( cp. sect. IV: 4). However, Myrdal' s most important contribution to the development of dynamic method is not his version of monetary equilibrium, which has some defects because of the use of an 'instantaneous analysis', but the coinage of the notions of ex ante/ex post, since with these notions it is possible to undertake a disequilibrium analysis. Myrdal shows the importance of ex ante/ex post in his analysis of the equalizing factors between savings and investment, which is much superior to Lindahl's analysis of 1930. Furthermore, his explicit analysis of the savings-investment mechanism makes it an ideal vantage point for making a detailed comparison between his analysis and Keynes' principle of effective demand.
