Did the Keynesian revolution retard the development of portfolio theory?

Abstract

In 1935 Hicks put forward a framework for monetary theory which contained the essence of portfolio theory. Twenty years passed before Tobin then picked up this research and developed it further, going on to receive the nobel prize in 1981. This work explains this gap by hypothesising that with the Keynesian Revolution, research became concentrated on the real sector of the economy, while the monetary sector was represented by the money demand function. As attention become centred on the real sector, the monetary sector was narrowed to the demand for money function. JEL: B22, E40

Keywords

• Hicks
• portfolio theory
• Tobin
• Keynesian revolution