The Monetary Circuit Approach: a Stock-Flow Consistent Model*
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Nominality of Money: Theory of Credit Money and Chartalism Atsushi Naito
Review of Keynesian Studies Vol.2 Atsushi Naito Nominality of Money: Theory of Credit Money and Chartalism Atsushi Naito Abstract This paper focuses on the unit of account function of money that is emphasized by Keynes in his book A Treatise on Money (1930) and recently in post-Keynesian endogenous money theory and modern Chartalism, or in other words Modern Monetary Theory. These theories consider the nominality of money as an important characteristic because the unit of account and the corresponding money as a substance could be anything, and this aspect highlights the nominal nature of money; however, although these theories are closely associated, they are different. The three objectives of this paper are to investigate the nominality of money common to both the theories, examine the relationship and differences between the two theories with a focus on Chartalism, and elucidate the significance and policy implications of Chartalism. Keywords: Chartalism; Credit Money; Nominality of Money; Keynes JEL Classification Number: B22; B52; E42; E52; E62 122 Review of Keynesian Studies Vol.2 Atsushi Naito I. Introduction Recent years have seen the development of Modern Monetary Theory or Chartalism and it now holds a certain prestige in the field. This theory primarily deals with state money or fiat money; however, in Post Keynesian economics, the endogenous money theory and theory of monetary circuit place the stress on bank money or credit money. Although Chartalism and the theory of credit money are clearly opposed to each other, there exists another axis of conflict in the field of monetary theory. According to the textbooks, this axis concerns the functions of money, such as means of exchange, means of account, and store of value. -
Newsletter Number 34: January 2, 2011 the First Year of the Decade, 2010, Began with the Earthquakes in Haiti, Which Were Follow
Newsletter Number 34: January 2, 2011 The first year of the decade, 2010, began with the earthquakes in Haiti, which were followed by the Gulf Coast oil spill. The near-depression of 2008-09 continued to wreak havoc even as the recession formally ended, and one of the last pieces of legislation passed by the government in 2010 was clearly a bipartisan, two-pronged approach at further stimulus and relief for those suffering from the consequences of the economic troubles. The rising influence of Asia, notably India and especially China, continued to play out in U.S. foreign and trade policy. The midterm elections were amazingly expensive, contentious, and extensively (if not always well) covered; & the House of Representatives will not exactly be a tea party for the Democratic Party. Yet the flurry of significant votes and legislation passed at the end of the 111th Congress suggested (again, for those familiar with history) that the media may need a new phrase to replace “lame- duck” to discuss post-election congressional meetings. Though they kicked the budget can down the road, the passage of New START, the repeal of DADT, the unsuccessful attempts to enact the Dream Act, and the aforementioned deal on extending the Bush era tax cuts for everyone regardless of income (including the 13 month extension of unemployment benefits for 99ers, the estate tax provision, and the 2% social security break for all workers) made this a rather significant congressional session whether you are thrilled, chilled, would rather have been billed, or wish it had all been killed. -
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European Journal of Economics and Economic Policies: Intervention, Vol. 15 No. 1, 2018, pp. 2–11 ‘The vigorous critique of the neo-Kaleckian or post- Kaleckian growth model is a measure of its success’ Interview with Marc Lavoie Marc Lavoie is a Senior Research Chair of the University of Sorbonne Paris Cité, located at the University of Paris 13, and he is a member of the Centre d’Économie de Paris- Nord (CEPN), France. Between 1979 and 2016 he taught at the University of Ottawa, Canada, where he is now an emeritus professor. He received a ‘doctorat honorifique’ from the University of Paris 13, France, in 2015. He is one of the managing editors of Metroeconomica and of the European Journal of Economics and Economic Policies: Intervention, and he is an IMK and FMM fellow. His latest work is Post-Keynesian Economics: New Foundations (2014) – an exhaustive account of post-Keynesian economic theory – for which he received the 2017 Myrdal Prize of the European Asso- ciation for Evolutionary Political Economy. How did you get interested in post-Keynesian or heterodox economics and how did you get in contact with post-Keynesian economists? I was a student at Carleton University, in Ottawa. I had chosen to go to this English- speaking university because I feared that I would be frustrated by not getting enough classes in French at the University of Ottawa, which is a bilingual university. At Carleton I knew everything would be in English anyway. In my fourth year, there was an honours seminar which was run by Tom Rymes – T.K. -
Refutations of Say's Law and Dynamics of a Monetary Economy
Refutations of Say’s Law and Dynamics of a Monetary Economy of Production Edouard Cottin-Euziol To cite this version: Edouard Cottin-Euziol. Refutations of Say’s Law and Dynamics of a Monetary Economy of Produc- tion. 2020. hal-02511407 HAL Id: hal-02511407 https://hal.archives-ouvertes.fr/hal-02511407 Preprint submitted on 18 Mar 2020 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. Refutations of Say’s Law and Dynamics of a Monetary Economy of Production Edouard Cottin-Euziol1 Abstract: In a monetary economy of production, Say’s law is invalid for several reasons. On the basis of some of these refutations (Schmitt, 1984; Renaud, 2000), it is possible to state that the revenues generated by the production process are structurally lower than the supply price of production. We study here the dynamics of such an economy and obtain two main results. First, the long- term debt level of this economy has to increase during a growth phase to enable demand to grow at the same pace as supply. Secondly, due to the repayment of this debt, the gap between supply and net revenues generated by the production process widens along a growth phase. -
Maverick Who Endured with Ideas Undimmed
13/10/2017 FT.com / Comment / Obituaries - Maverick who endured with ideas undimmed COMMENT OBITUARIES FT Home > Comment > Obituaries Maverick who endured with ideas undimmed LATEST HEADLINES FROM CNN By Sue Cameron and John Llewellyn Published: May 14 2010 05:44 | Last updated: May 14 2010 05:44 Ex-jihadist at heart of Libya's revolution Proposed legal changes in China cause jitters Wynne Godley, who has died at the age of 83, achieved fame for his stringent attacks on the Yemen opposition considers using military to out Saleh monetarist doctrines of the Thatcherites – he once dismissed their policies as “a gigantic con Witnesses: Riot police clash with Bahrain demonstrators trick”. India's anti-corruption movement gains momentum More His dire warnings in the late 1970s that unemployment would rise to 3m in the 1980s earned him the title “Cassandra of the Fens” and were derided – until they came true. Jobs Business for sale Contracts & tenders Then, after years in the wilderness, with his research grant cut and academics giving him the cold shoulder, he returned to the establishment fold as one of the Treasury’s independent SEARCH Enter keywords forecasters. It was a tribute to his intellectual strength that he came through such setbacks to produce MARKETING EXECUTIVE APPOINTMENT With Career some of the most novel and insightful analysis of economies of his generation. What made his Progression achievements all the more singular was that he had started his career as a professional Cumberland Building Society musician. CUSTOMER SERVICES EXECUTIVE APPOINTMENT with Career Progression Wynne Alexander Hugh Godley was born in 1926, the younger son of Lord Kilbracken, an Cumberland Building Society Anglo-Irish peer. -
Industrial and Financial Circulation of Money Jespersen, Jesper
Roskilde University Reconsidering Keynes in perspective of "monetary circuit theory" the lost distinction between industrial and financial circulation of money Jespersen, Jesper Publication date: 2009 Document Version Publisher's PDF, also known as Version of record Citation for published version (APA): Jespersen, J. (2009). Reconsidering Keynes in perspective of "monetary circuit theory": the lost distinction between industrial and financial circulation of money. Roskilde Universitet. General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain. • You may freely distribute the URL identifying the publication in the public portal. Take down policy If you believe that this document breaches copyright please contact [email protected] providing details, and we will remove access to the work immediately and investigate your claim. Download date: 24. Sep. 2021 November 2009 [email protected] Reconsidering Keynes in perspective of ‘monetary circuit theory’: The lost distinction between industrial and financial circulation of money1 By Jesper Jespersen Roskilde University Abstract Monetary circuit theory assumes that the money supply is endogenously determined by the banking system. Money is provided by banks through loans and overdraft facilities demanded by firms (and households) undertaking real sector activities. -
The Post-Keynesian Economics of Credit and Debt Marc Lavoie
The post-Keynesian economics of credit and debt Marc Lavoie Department of Economics, University of Ottawa November 2012 To take a not at all arbitrary example, a standard macroeconomic approach, the IS-LM model (don’t ask) told us that under depression-type conditions like those we’re experiencing, some of the usual rules would cease to apply: trillion-dollar budget deficits wouldn’t drive up interest rates, huge increases in the money supply wouldn’t cause runaway inflation. Economists who took that model seriously back in, say, early 2009 were ridiculed and lambasted for making such counterintuitive assertions. But their predictions came true. So yes, it’s possible to have social science with the power to predict events and, maybe, to lead to a better future. Paul Krugman, “Introduction” to Isaac Asimov, The Foundation Trilogy, The Folio Society, London, 2012, p. xv. Paul Krugman believes that it is enough to go back to the old IS-LM model to understand how the economy functions and to make predictions about what is about to happen. He is partially right and partially wrong. Certainly the current sophisticated models put forward by most of his mainstream colleagues did not allow for correct predictions. However, although we need to go back to macroeconomics before the new classical and rational expectations revolution, thus going beyond the representative agent with rational expectations (RARE as John King (2012) calls it), we certainly should not go back to the simple IS/LM model that Krugman is so enamoured with. The purpose of the session on the economics of credit and debt is to stimulate new thinking on credit and debt. -
Modern Monetary Circuit Theory, Stability of Interconnected Banking Network, and Balance Sheet Optimization for Individual Banks
2nd Reading June 29, 2016 14:31 WSPC/S0219-0249 104-IJTAF SPI-J071 1650034 International Journal of Theoretical and Applied Finance Vol. 19 (2016) 1650034 (57 pages) c World Scientific Publishing Company DOI: 10.1142/S0219024916500345 MODERN MONETARY CIRCUIT THEORY, STABILITY OF INTERCONNECTED BANKING NETWORK, AND BALANCE SHEET OPTIMIZATION FOR INDIVIDUAL BANKS ALEXANDER LIPTON Connection Science Fellow, MIT Connection Science Media Lab, Massachusetts Institute of Technology 77, Massachusetts Avenue, Cambridge, MA 02139, USA [email protected] Received 2 November 2015 Revised 29 April 2016 Published 1 July 2016 A modern version of monetary circuit theory with a particular emphasis on stochastic underpinning mechanisms is developed. It is explained how money is created by the banking system as a whole and by individual banks. The role of central banks as system stabilizers and liquidity providers is elucidated. It is shown how in the process of money creation banks become naturally interconnected. A novel extended structural default model describing the stability of the Interconnected banking network is proposed. The purpose of bank capital and liquidity is explained. Multi-period constrained optimization problem for bank balance sheet is formulated and solved in a simple case. Both theoretical and practical aspects are covered. Keywords: Modern monetary circuit; Keen equations; credit creation banking; fractional by WSPC on 07/18/16. For personal use only. reserve banking; financial inter mediation banking; interconnected banking network; bal- ance sheet optimization. Int. J. Theor. Appl. Finan. Downloaded from www.worldscientific.com Balkan: Are you a religious man, Corso? I mean, do you believe in the supernatural? Corso: I believe in my percentage. -
The “Kansas City” Approach to Modern Money Theory
Working Paper No. 961 The “Kansas City” Approach to Modern Money Theory by L. Randall Wray Levy Economics Institute of Bard College July 2020 The Levy Economics Institute Working Paper Collection presents research in progress by Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals. Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad. Levy Economics Institute P.O. Box 5000 Annandale-on-Hudson, NY 12504-5000 http://www.levyinstitute.org Copyright © Levy Economics Institute 2020 All rights reserved ISSN 1547-366X ABSTRACT Modern money theory (MMT) synthesizes several traditions from heterodox economics. Its focus is on describing monetary and fiscal operations in nations that issue a sovereign currency. As such, it applies Georg Friedrich Knapp’s state money approach (chartalism), also adopted by John Maynard Keynes in his Treatise on Money. MMT emphasizes the difference between a sovereign currency issuer and a sovereign currency user with respect to issues such as fiscal and monetary policy space, ability to make all payments as they come due, credit worthiness, and insolvency. Following A. Mitchell Innes, however, MMT acknowledges some similarities between sovereign and nonsovereign issues of liabilities, and hence integrates a credit theory of money (or, “endogenous money theory,” as it is usually termed by post-Keynesians) with state money theory. -
The Politicized Worker Under the National Labor Relations Act
Hofstra Labor and Employment Law Journal Volume 5 | Issue 1 Article 3 1987 The olitP icized Worker Under the National Labor Relations Act Barry Sautman Follow this and additional works at: http://scholarlycommons.law.hofstra.edu/hlelj Part of the Law Commons Recommended Citation Sautman, Barry (1987) "The oP liticized Worker Under the National Labor Relations Act," Hofstra Labor and Employment Law Journal: Vol. 5: Iss. 1, Article 3. Available at: http://scholarlycommons.law.hofstra.edu/hlelj/vol5/iss1/3 This document is brought to you for free and open access by Scholarly Commons at Hofstra Law. It has been accepted for inclusion in Hofstra Labor and Employment Law Journal by an authorized administrator of Scholarly Commons at Hofstra Law. For more information, please contact [email protected]. Sautman: The Politicized Worker Under the National Labor Relations Act THE POLITICIZED WORKER UNDER THE NATIONAL LABOR RELATIONS ACT Barry Sautman* I. INTRODUCTION The American workplace has a long history of organizing by politicized workers.' These are employees who not only have an abid- ing interest in politics, but who also analyze their grievances and those of fellow workers in political terms, viewing their problems as systemic and not merely local. Often the politicized worker has ex- ceptional insight and commitment to organizing. These qualities are a function of the high emphasis that the organization to which the activist belongs places on selflessness and education of their mem- bers, stressing a range of both historical and contemporary exper- iences. These qualities distinguish the politicized worker from his typical, less politically aware counterpart. -
Monetary Economics After the Global Financial Crisis: What Has Happened to the Endogenous Money Theory?
This is a repository copy of Monetary economics after the global financial crisis: what has happened to the endogenous money theory?. White Rose Research Online URL for this paper: https://eprints.whiterose.ac.uk/156194/ Version: Accepted Version Article: Fontana, G orcid.org/0000-0002-8055-5326, Realfonzo, R and Veronese Passarella, M orcid.org/0000-0001-7652-5952 (2020) Monetary economics after the global financial crisis: what has happened to the endogenous money theory? European Journal of Economics and Economic Policies: Intervention, 17 (3). pp. 339-355. ISSN 2052-7764 https://doi.org/10.4337/ejeep.2020.0056 © 2020, the authors. The definitive, peer reviewed and edited version of this article is published in Fontana, G , Realfonzo, R and Veronese Passarella, M (2020) Monetary economics after the global financial crisis: what has happened to the endogenous money theory? European Journal of Economics and Economic Policies: Intervention. ISSN 2052- 7764. Uploaded in accordance with the publisher's self-archiving policy. Reuse Items deposited in White Rose Research Online are protected by copyright, with all rights reserved unless indicated otherwise. They may be downloaded and/or printed for private study, or other acts as permitted by national copyright laws. The publisher or other rights holders may allow further reproduction and re-use of the full text version. This is indicated by the licence information on the White Rose Research Online record for the item. Takedown If you consider content in White Rose Research Online to be in breach of UK law, please notify us by emailing [email protected] including the URL of the record and the reason for the withdrawal request. -
Financialization and the Monetary Circuit : a Macro-Accounting Approach
This is a repository copy of Financialization and the monetary circuit : a macro-accounting approach. White Rose Research Online URL for this paper: http://eprints.whiterose.ac.uk/80854/ Version: Accepted Version Article: Passarella, MV (2014) Financialization and the monetary circuit : a macro-accounting approach. Review of Political Economy, 26 (1). 128 - 148. ISSN 0953-8259 https://doi.org/10.1080/09538259.2013.874195 Reuse Unless indicated otherwise, fulltext items are protected by copyright with all rights reserved. The copyright exception in section 29 of the Copyright, Designs and Patents Act 1988 allows the making of a single copy solely for the purpose of non-commercial research or private study within the limits of fair dealing. The publisher or other rights-holder may allow further reproduction and re-use of this version - refer to the White Rose Research Online record for this item. Where records identify the publisher as the copyright holder, users can verify any specific terms of use on the publisher’s website. Takedown If you consider content in White Rose Research Online to be in breach of UK law, please notify us by emailing [email protected] including the URL of the record and the reason for the withdrawal request. [email protected] https://eprints.whiterose.ac.uk/ FINANCIALIZATION AND THE MONETARY CIRCUIT: A MACRO-ACCOUNTING APPROACH * MARCO PASSARELLA ABSTRACT: This paper aims to cross-breed the standard monetary circuit accounting model with inputs from the current Post-Keynesian literature. The goal is twofold: (i) to analyze the impact of household credit-based consumption, fed by capital-asset inflation, on the soundness of a ‘pure sign-money’ economy of production; (ii) to supply a bit more sophisticated description of the working of modern financial systems than the one grounded on the usual ‘bank-based vs.