The Basic Price Spread Ratio

Abstract

This essay endeavours to follow my reading of the argument in Bernard Lonergan’s quite brief discussion of the above topic, to be found in Macroeconomic Dynamics: An Essay in Circulation Analysis, Collected Works of Bernard Lonergan 15 (Toronto: Toronto University Press, 1999), as §28 (pages 156-162).

Apart from minor changes in notation, etc., and some greater detail in the use of mathematical arguments, there is little that is novel in what is offered. It merely reflects what I found helpful, and the augmentations I needed, in my own attempts to grasp Lonergan’s arguments.

The essential point made by Lonergan is that the cyclical variations in the ratio under discussion are treated as signals of what is happening in the economy. It is because these in practice are often misinterpreted (primarily because of misleading underlying theory rather than as a result of malevolent greed) that the ongoing ‘pure cycle’ becomes corrupted into the boom and bust of the ‘trade cycle’.