ABSTRACT
Keynes’s liquidity preference theory, which attracted a lot of attention after the publication of the General Theory, has recently returned to prominence. The aim of this paper is to provide an appraisal of Keynes’s liquidity preference theory and to put it into perspective. The exegesis of how Keynes reached this theory can help us to grasp and understand its originality and importance. Following Keynes’s treatment of liquidity preference, we will focus our attention strictly on the demand side even though the supply of money has an important part to play in the determination of the rate of interest.
