|Birth||January 8, 1922
|Death||August 7, 1995 (aged 73)
|Institution||Hebrew University of Jerusalem|
|Alma mater||University of Chicago|
John Maynard Keynes
Don Patinkin (Hebrew: דן פטינקין) (January 8, 1922 – August 7, 1995) was an influential Israeli/American monetary economist. Trained at Chicago under the tutelage of Oskar Lange and half-participating in the goings-on at the Cowles Commission next door, Patinkin emerged as an authority in monetary theory in the post-war years.
Patinkin was born in Chicago, Illinois, the son of a Jewish emigrant from Russia. He graduated from the University of Chicago in 1943, the same year he completed a decade of study of the Talmud at the Chicago Yeshiva.
His book Money, Interest and Prices (1956) is a remembered today as a landmark investigation and summary of the state of the Neo-Keynesian macroeconomic theory of its time, and is frequently described as a 'classic'. It investigated theoretical problems within Keynesian economics, and drew up points which would later be of interest to many different fields: a "disequilibrium" formulation of macroeconomics, the problems arising from the distinction between stocks and flows, stability and path-dependency of equilibria, etc.
The book's central goal, already announced in a series of articles from 1948 to 1954, was to try to integrate monetary theory and Walrasian value theory. This task not only became central to Neo-Keynesian economics but was also instrumental in giving birth to various strands of Post-Walrasian theory. That integration, which had long eluded the marginalists, rested on the abandonment of Say's Law and the placing of money in the utility function—thus violating the principle of homogeneity of demand. The Quantity Theory, Patinkin claimed, indeed could not work without that violation.
An important criticism of Patinkin's utility function in which real money balances appear along with other goods came from Frank Hahn in “On Some Problems of Proving the Existence of an Equilibrium in a Monetary Economy” in Theory of Interest Rates (1965), edited by Hahn and Brechling. Hahn showed that Patinkin's formulation could not ensure a non-zero price for money in equilibrium. Hence Patinkin's was a model in which money might not be held and therefore failed a vital requirement of a monetary economy.
The "Patinkin Controversy" highlighted the inability of Neoclassical theory to satisfactorily incorporate money and led to a reassessment of the micro-macro link by the Post-Walrasians in the 1960s and 1970s as well as numerous attempts to reformulate a modern theory of money and credit.
Patinkin was also instrumental (1948, 1949) in constructing the "rigidity" interpretation of Keynes that was to become central to the Neo-Keynesian synthesis. While recurrently engaged in the monetary debate he began, Don Patinkin, in his later years, began a deeper study of the works of J.M. Keynes, producing two books (1976, 1982) and a series of papers which challenged the Post Keynesian interpretation. His parallel work on the history of the Chicago School (1981) also challenged Milton Friedman's claims that he was working in its "oral tradition".
Don Patinkin worked at the Hebrew University of Jerusalem for most of his post-Chicago life.