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The name of Schumpeter is not among those of the precursors of post‐Keynesian monetary theory. This seems understandable when considering Schumpeter's ferocious criticism of The General Theory. However, in recent years various authors have highlighted significant points of contact between Schumpeter's monetary theory and that of Keynes and of post‐Keynesians. The objective of this work is not only to indicate the similarities between Schumpeter's monetary theory and that of the post‐Keynesians, but rather to show that Schumpeter's approach to money and credit allows making post‐Keynesian monetary theory more solid. In particular, we will show that Schumpeter's monetary theory enables to develop an explanation of the principle of effective demand sounder than that based on the simple presence of endogenous money and on the liquidity preference theory. [ABSTRACT FROM AUTHOR]

Anwar Shaikh has proposed the classical theory of inflation in his recent book Capitalism, Competition, Conflict, Crisis. Even though it is a relevant and well-founded heterodox theory, the empirical literature on the subject is scanty. In this article, we empirically evaluate the explanatory capabilities of Shaikh's theory of inflation for the case of Europe. We constructed GMM and Fixed Effects models for the panel of 23 European countries over the period 2001–20. The overall results demonstrated that Shaikh's classical theory of inflation generated empirically successful results in explaining the supply dynamics of European inflation, while it produced no statistically significant effect on the demand dynamics of inflation due to the European inflation level, as expected. [ABSTRACT FROM AUTHOR]

The paper presents a closed-economy stock-flow consistent model aimed at outlining the natural synthesis between two fundamental pillars of the post-Keynesian approach: the supermultiplier (SM) model and the monetary theory of production based on the notion of endogenous money. Such integration allows the defining of the whole economic mechanism describing the financing of autonomous components and investments, as well as the determination of output and saving within a monetary economy of production. Our contribution argues that the endogenous money theory plays a non-ancillary role within the SM approach. By comparing different scenarios describing the financing of autonomous components of demand and investments (bank loans, retained profits, CB, and equity emissions), we point out that the endogenous process of money creation is the only structural mechanism through which the autonomous components can exist and be independent of current income, and Keynesian causality materializes in the long-run. In general, it is the initial finance of investments and autonomous components through endogenous money that allows them to be ex-post founded by household saving. Conversely, the initial finance through the existing stock of wealth, although it does not intact the investments-saving causality, can be considered only a temporary spin-off of the endogenous money process. [ABSTRACT FROM AUTHOR]

In chapter 15 of volume 2 of Capital, Marx introduced the concept of set-free money capital during the turnover process of industrial capital, positing its role in the credit system. Saros further formalized this process, suggesting that set-free money capital could serve as loanable funds, impacting the credit system. This article advances this research by making three significant contributions. Firstly, it offers a more succinct formalization of the turnover process, improving pedagogical clarity. Secondly, it reinterprets the significance of set-free money capital within the modern credit money system using post-Keynesian endogenous money theory, linking production directly to the money supply. Lastly, it demonstrates through simulations that production structure influences the periodic fluctuations of set-free money capital at the macro level, affecting the money supply. JEL Classification : B51, E32, E51 [ABSTRACT FROM AUTHOR]

Several policymakers and academic works have been discussing the nature of Central Bank Digital Currency (CBDC) as well as its debated relationship with crypto-assets. CBDC would allow the private (non-financial) sector to access the central bank’s reserves. Given its superior hierarchy in the money spectrum, CBDC adoption could trigger a strong or mild conversion from deposits, depending on its design, with strong impacts on the assets and liabilities composition and magnitude of different actors. The aim of this paper is to study the dynamics related to the transmigration process from deposits to CBDC as well as the process of money creation through a detailed step-by-step analysis, tracking the transactions between the institutions involved in its adoption. It underlines the validity of the endogenous money theory (EMT) in describing those transactions while clarifying the maintenance of the commercial banks’ vital role in the process of money creation, in a world with the emergence of CBDC. [ABSTRACT FROM AUTHOR]

This article is a post-Keynesian stock flow consistent (PK-SFC) model that analyses the dynamics of an economy characterised by several — often individually studied — features of PK-SFC studies together with some innovative aspects. In particular, we investigate the income and wealth distribution between two social classes, capitalists and workers, after a period of a crisis subject to different policy scenarios. Non-financial firms but also government can undertake investments decisions and both accumulate capital. Finally, we consider the workers' and capitalists' consumption behaviour that contributes to produce (un)sustainable paths. Our model is built upon Bibi (2020, 2021) within an endogenous money framework and is calibrated using available data for major advanced economies. Simulations are conducted to question the different government fiscal policies to reduce unemployment boosting the economic activity, to obtain a more equitable distribution between social classes while obtaining those goals in a sustainable way. [ABSTRACT FROM AUTHOR]

In this paper, we build a simple model on the role of households' liquidity preference in the determination of economic performance. We postulate, for the sake of the argument, a purely 'horizontalist' environment, i.e., a world of endogenous money where the central bank is able to fix the interest rate(s) at a level of its own willing. We show that even in such a framework liquidity preference, while obviously not constituting anymore a theory for the determination of the interest rate, continues to be a key element for the determination of both the level and evolution over time of aggregate income and capital accumulation. In our model, this happens because of the working of a mechanism so far unexplored in the literature, i.e., the endogenous variations of banks' policy of profits' distribution in response to changes in the liquidity preference of the public. [ABSTRACT FROM AUTHOR]

In this paper, following Cesaratto's lead (Cesaratto, [2005]. Pension Reform and Economic Theory: A Non-Orthodox Analysis. Cheltenham: Edward Elgar, especially chapters 6-8), we measure the impact of pensioners' spending on output and employment in the Spanish economy in 2021 by means of the Sraffian supermultiplier, taking pensioners' expenditure as a component of autonomous demand. To do so, we follow another lead, from Dejuán (Dejuan, [2023]. The Supermultiplier. A Cornerstone of the New Macroeconomics. Cheltenham: Edward Elgar, chapter 10), who suggests using the Leontief inverse of an extended SAM (social accounting matrix) that also includes both induced consumption and expansionary investment as a multisectoral supermultiplier, or multiplier-accelerator. The weight of PAYG pensions to people aged 65 or older in 2021 is 8 per cent of GDP, and their expenditure ‘puts in motion’ 6,7 per cent of total production and total employment (directly, indirectly, and hyper-indirect or induced). The government recovers 42 cents in taxes for each euro spent on pensions. Pensions in 2050 are sustainable, either raising taxes on profits or if exports grow pari passu with pensions at a rate below historical records. [ABSTRACT FROM AUTHOR]

Iran’s economy has encountered significant challenges in recent years, with the government debt to contractors emerging as one of the most urgent issues. This situation has negatively impacted Iran’s monetary and banking system, leading to several adverse consequences such as increased funding costs for banks, higher loan interest rates, excessive money supply, and a reduced capacity for banks to provide loans. A proposed solution is based on credit easing and endogenous money, which involves settling the government debt to contractors by making adjustments on the asset side of the Central Bank’s balance sheet. However, the practical implementation of this policy depends on the use of Central Bank resources, which raises concerns about a sudden increase in the money supply and potential negative effects on other economic variables, especially inflation. This uncertainty has led to doubts about the feasibility of such a strategy. The present research aimed to examine the fundamental principles and prerequisites for adopting a credit easing policy in Iran. The study also used stock-flow consistent models to evaluate the potential outcomes of implementation of the policy. The findings indicate that settling the government debt to banks by using the Central Bank resources results in an expansion of the monetary base and money supply, an increase in real GDP, and a reduction in both inflation and interest rates compared to the baseline scenario.1.IntroductionIran’s economy has been facing various problems in recent years. One significant issue is the government debt to contractors, which has adversely affected Iran’s economy, particularly the monetary and banking system. The government’s failure to settle its debts with contractors results in contractors being unable to repay loans taken from banks, leading to an increase in the banks’ non-performing loans. This predicament has precipitated several adverse consequences, including higher funding costs for banks, increased interest rates on loans, an uncontrolled surge in the money supply, and a diminished capacity for banks to provide loans. To address this challenge, some economists, emphasizing endogenous money, look to the quantitative policies applied by central banks in advanced countries like Japan and the United States. They have proposed a solution grounded in credit easing, which involves settling the government debt to contractors by making adjustments on the asset side of the Central Bank’s balance sheet.2.Materials and MethodsIn this method, the government issues bonds to settle its debt with contractors and provides these bonds to the contractors. The Central Bank then purchases these bonds by increasing the bank’s reserves. Since the Central Bank does not directly transact with individuals, it uses commercial banks as intermediaries to facilitate the payments. Consequently, the money supply and the monetary base increase immediately. However, if the contractors owe money to the banks, according to the law of reflux, the newly created money will quickly disappear. This method is largely similar to the second type of treasury bonds used by the Iranian government in recent years. Implementing this policy can reduce non-performing loans, curb the growth of the money supply, and prevent the recognition of illusory profits. It can also lower the level of overdue loans and improve banks’ balance sheets. Additionally, it can reduce the banks’ debt to the Central Bank, thereby lowering the cost of money and reducing loan interest rates. Moreover, the reduction in interest rates can lead to increased loan demand and, consequently, future growth in the money supply.It should be noted that this policy leads to a change in the composition of the Central Bank’s assets, but it does not necessarily result in the growth of monetary base and money supply. However, since the policy relies on the use of Central Bank resources, concerns about a sharp increase in the money supply and potential adverse effects on macroeconomic variables, such as inflation, have always hindered its adoption. The present study used Stock-Flow Consistent (SFC) models to evaluate the effects of these policies on Iran’s macroeconomy. Having gained prominence since the 2007–2008 financial crisis, SFC models aim to integrate the real and financial sectors of the economy within a single framework. They help predict endogenous crises in the economy and enable modeling of the economy based on endogenous money. Therefore, SFC models were used to determine the effects of policies similar to credit easing to settle the government debt with contractors. The focus is on various economic variables, including the monetary base, money supply, and banks’ balance sheets in the monetary sector, as well as real GDP, economic growth, real consumption, inflation, and interest rates in the real sector of the economy.3.Results and DiscussionThe results indicate that settling the government debt to banks by using the Central Bank resources leads to an expansion in the monetary base and money supply, as well as an increase in real GDP and real consumption compared to the baseline scenario. However, the effect of this policy on economic growth completely dissipates after eight periods following its implementation, with the growth rate difference eventually tending towards zero. The graph below illustrates the difference in economic growth between the baseline scenario and the scenario where the government debt to contractors is settled using the Central Bank resources. Figure 1. Difference in Economic Growth: The Baseline Scenario and the Government Debt Settlement Scenario Source: The research analysisAccording to the model’s results, implementing this policy leads to a long-term decrease in inflation by 0.23 percentage points.Figure 2. Difference in Inflation: The Baseline Scenario and the Government Debt Settlement Scenario Source: The research estimationsAdditionally, the results indicate that the policy can lead to a 0.53 percentage point decrease in the interest rate. Figure 3. Difference in the Interest Rate: The Baseline Scenario and the Government Debt Settlement Scenario Source: The research estimations4.ConclusionThe model’s results indicated that the policy, despite increasing the money supply compared to the base scenario, leads to improved economic growth, reduced inflation and interest rates, enhanced bank balance sheets, and increased household welfare (via higher real consumption) compared to the baseline scenario.However, the method is recommended only to address the current problem in the present situation. The research results showed that the proposed policies guide the economy onto a better path than its current trajectory, but they are not a prescription for the government’s indiscriminate use of the monetary base. To improve conditions in the long term, the government needs a program to control its budget deficit and stop borrowing from banks and the Central Bank. According to the findings, borrowing from the Central Bank to settle outstanding debts with contractors is preferable to leaving these debts unpaid. However, the optimal approach is for the government to avoid needing to borrow from the Central Bank altogether.

The paper examines different real-monetary dynamics and policy responses during the COVID-19 pandemic (C19P) and the Global Financial Crisis (GFC) in the United States through the lens of the Sraffian Supermultiplier model and the endogenous money approach. On the one hand, the C19P triggered a relatively deeper contraction in GDP, but its recovery was relatively faster and more robust. The ‘V’ shaped recovery from the C19P significantly contrasted the ‘L’ shaped trajectory of the post-GFC period. On the other hand, the money supply (M2) grew relatively more, and the monetary base expanded relatively less during the C19P. To explain these different real-monetary dynamics, a theoretical framework is developed and analyzed empirically for the United States. The theoretical model and the empirical analysis suggest that money supply is endogenously determined by creditworthy demand derived from the multiplier-accelerator effect of non-capacity generating autonomous demand, in which government spending plays a key role. Therefore, the absence of full hysteresis after the C19P shock had nothing to do with a traditional neoclassical trend reversal mechanism but with the fiscal supermultiplier effect of the extraordinary pandemic-related government spending. [ABSTRACT FROM AUTHOR]

How to finance the Green Transition toward net-zero carbon emissions remains an open question. The literature either operates within a market-failure paradigm that calls for carbon taxes or cap-and-trade to help markets correct themselves, or via war finance analogies that offer a "triad" of state intervention possibilities: taxation, treasury borrowing, and central bank money creation. These frameworks often lack a thorough conceptualization of endogenous credit money creation and disregard the systemic and procedural dimensions of financing the Green Transition. We propose "Monetary Architecture" as a more comprehensive framework that perceives the monetary and financial system as a constantly evolving and historically specific hierarchical web of interlocking balance sheets. Using the United States as a case study, we stress the importance of a systemic financing dimension that uses all available elasticity space in the monetary architecture while considering a division of labor between firefighting balance sheets such as central banks or treasuries and workhorse balance sheets such as off-balance-sheet fiscal agencies or shadow banks. Procedurally, public workhorses should provide an initial balance sheet expansion and crowd in the rest of the monetary architecture, notably shadow banks, for long-term funding. Firefighters should prevent systemic instability and manage a possible final contraction. [ABSTRACT FROM AUTHOR]

Money supply adapts to the demand of credit and has a crucial impact in determining production levels. However, at the same time, under certain conditions the issuance of money may also boost inflation. In this article, with the help of Shaikh's 'classical theory', we explain the main reasons for the recent hyperinflation experienced in Venezuela. On the supply side, we analyze the context of loss of competitiveness due to the overvaluation of the national currency. On the other hand, we explore how the credit to the oil company (PDVSA) has led to an exponential growth in aggregate demand. [ABSTRACT FROM AUTHOR]

In this paper we investigate the impact of the balance-of-payments constraint on output, income distribution and policy space in a small economy open to both commercial and financial flows. We do so by extending a Sraffian supermultiplier growth model to consider current and capital accounts and endogenous money. Expansionary fiscal policies increase output and its long run growth rate but have a negative impact on the balance-of-payments. Based on these results, we derive the value of government spending that maximises output while maintaining external equilibrium.Monetary policy also influences the balance-of-payments by attracting foreign financial flows through higher interest rates. This relationship is non-monotonic, since these flows can finance the external deficit resulting from a high output level but can also lead to a greater interest burden. This trade off allows us to find the level of the interest rate that maximises external space. It also implies that, with limits, raising interest rates might allow for higher real wages.Lastly, we examine the effects of the currency denomination of debt. We find that, in case of a depreciation, debt in domestic currency allows for a less contractionary adjustment than foreign currency-denominated debt but does not lead to higher economic growth. [ABSTRACT FROM AUTHOR]

Reviewing Marc Lavoie's comprehensive and well-structured discussion of open-economy macroeconomics allows us to revisit some key Post-Keynesian contributions and confirm their continued relevance to our understanding of international economic, financial and monetary relations. In the process Lavoie draws a consistently sharp contrast with standard-theory concepts and models, much of it organized around his elaboration of endogenous money in an international context and modern trade flows embedded in a highly globalized and financialized world economy which have little to do with comparative advantage. He thereby provides us with a conceptual road map for a meta-economic revolution which recognizes that the world economy has a growth dynamic all of its own rather than being just the sum of its parts, the two-hundred or so national economies connected to each other through their balance of payments and exchange rates. [ABSTRACT FROM AUTHOR]

This paper proposes a functional analysis of the input of the traditional banking sector in an endogenous money framework. Although banks create bank money, central bank money (or reserves) cannot be produced by banks, which require it as an input. Deposits are the cheapest source of central bank money already in the system, so it can be argued that deposits serve as inputs for the banking industry. Nevertheless, for individual banks it is necessary to draw some distinctions between deposits corresponding to liquidity injection and pure accounting entries that are generated by the creation of loans. Furthermore, the role of bank bonds is discussed, in the context of whether they function more as equity or as deposits. Unlike other industries, it is hypothesised that the functional role of bank bonds is very different from that of equity, and it is rather a different form of bank funding of liquidity, with some advantages and disadvantages compared to deposits. Finally, a brief comparison is pursed between this analysis of the traditional banking sector and the simpler study of other financial intermediaries. [ABSTRACT FROM AUTHOR]

This article focuses on an analysis of chapter 4 of Lavoie's magnus opus, Post-Keynesian Economics: New Foundations. It is the opening chapter of the macroeconomic section of the book. As we argue, following Keynes's 'monetary theory of production', but also in line with Schumpeter, starting the discussion over macroeconomics with money makes sense. It is impossible, in post-Keynesian economics, to discuss the real economy independently of the monetary side of the analysis. In this sense, money and production, and debt, are linked within an endogenous money framework. This article covers and discusses all aspects of this chapter. [ABSTRACT FROM AUTHOR]

During financial and economic crises, government expenditure is a potential source of liquidity and replacement for private demand; this expenditure, in turn, generates more deposits and spending in the economy at large, potentially increasing the endogenous supply of money and overall liquidity in a given economy. Governments may also require liquidity support during crises, if bond market activity constrains access to funding. This paper introduces government activity to Mott's elaboration of Kalecki's theory of increasing risk, and its implications for endogenous money creation, especially during periods of heightened liquidity preference. Some governments are likely to face greater obstacles in providing liquidity and accessing funding in times of economic uncertainty, whether due to their issuance of a non-sovereign currency, their position in the global currency hierarchy, or both, while others may find their ability to provide liquidity is bolstered by popular perceptions of their credit worthiness. Recent crises illustrate the importance of understanding the monetary and financial factors that may constrain governments' abilities to fund deficits, especially given the importance of fiscal expenditure as a stabilizing economic force, or as a potential driver of development. [ABSTRACT FROM AUTHOR]

This paper reconsiders the work of Professor Alain Parguez (1940–2022) in the fields of macroeconomic policy, international political economy, and the theory of the monetary circuit, from the point of view of social ontology. It presents a stylized numerical example, involving bank balance sheets and the income statements of non-bank firms, to illustrate the issues that are at stake. [ABSTRACT FROM AUTHOR]

Modern Monetary Theory (MMT) has recently received significant attention in academic and policy circles. Critics question the sustainability of MMT‐prescribed approaches to fiscal and monetary policy, especially over extended periods of time, in the presence of international financial markets, and for developing country governments that borrow in foreign currency. I formalize some of these arguments using a dynamic, open economy, Tobin‐Markowitz portfolio balance environment that takes into account: (1) the role of expectations in the foreign exchange market and the feedback mechanisms between these and the exchange rate and inflation, and (2) interactions between the current account, debt accumulation, and the goods market. I show that continuous monetary accommodation of fiscal policy by a consolidated authority that operates along MMT‐prescribed lines is likely to generate instability and make it hard to maintain full employment with stable inflation. Importantly, this is true even in the absence of rational forward‐looking expectations or sovereign foreign indebtedness. [ABSTRACT FROM AUTHOR]

Since the global financial crisis in 2008, there has been an elevated interest in private debt and as a macroeconomic variable. In light of the lack of high-frequency data, this study presents a unique monthly time series dataset on credit from and deposits in Swedish commercial banks from 1875 to 2020, covering 1,752 monthly observations and most of Swedish commercial banking history. In a first application, the study examines to what extent money in Sweden has been exogenous, created independently of demand by the central bank, or endogenous, created in response to demand by commercial banks, during different institutional settings. The results, derived via cointegration and impulse-response functions, show that though the relationship between deposits and credit has changed over time, both theories often hold validity simultaneously. While changes in deposits often have had significant impact on credit, the opposite has also been true. There are, however, differences between different regulatory regimes, as well as for different groups of banks. [ABSTRACT FROM AUTHOR]

This study tests Korea's two endogenous money supply channels: the accommodationist and structuralist channels. The main analytic tools are the Fully Modified OLS, Maki's structural break test, Error Correction Model, and Impulse Response Function (IRF) analysis. The primary purpose of this study is to propose analytical methods to compare the two endogenous money supply channels. The analytic models also consider the impact of fiscal policy and the current account balance on reserves. The test results reveal a unilateral causality from loan to reserve and a bilateral causal relationship between loan/reserve and Lf/deposit ratio. These results suggest that both accommodationist and structuralist channels coexist in Korea. However, the structuralist channel explains a relatively small portion of the endogenous money supply process. The IRF analysis does not provide evidence for the pressure on the interest rate spread exerted by financial institutions' portfolio adjustment. This result can be attributed mainly to the central bank's growing accommodative attitude toward the reserve demand. [ABSTRACT FROM AUTHOR]

This paper challenges the validity for bank regulation of the Modigliani-Miller (MM) Theorems. We argue that the Modigliani–Miller analysis cannot be applied to banks because when lending creates deposits the asset side of banks varies together with the liability side and equity behaves more like a sticky variable. Hence, from an endogenous money point of view and Minsky's Financial Instability Hypothesis (FIH), much of the debate on bank capital adequacy rules is misleading because: First, it is not at a bank's discretion to decide the mix of its funding when it provides credit. Secondly, bank liability management might have implications for financial stability as far as it reduces the liquidity in the economy. Bank regulation in the lines of MM Theorems misses both points as long as it disregards the endogenous process of money supply and the effects of financial fragility. In this sense, refutation of the validity of MM Theorems for bank regulation lends support to a Minskian cash-flow oriented bank regulation for the detection of Ponzi finances. [ABSTRACT FROM AUTHOR]

The aim of the present article is to discuss the nature of money under a commodity standard. The notion of money supply endogeneity, endorsed by Post-Keynesian (PK) scholars within the institutional framework of modern credit economies, is extended to the case of a gold standard regime by recourse to the view of early classical economists, which highlights the endogenous determination of the supply of precious metals in a long-period position. This interpretation represents a more robust and natural extension of the PK approach than the neoclassical quantity-theoretic framework employed by several PK scholars to give account of the normal working of this monetary system. [ABSTRACT FROM AUTHOR]

The 2030 Agenda serves as a guide for current economic policy. Despite this, the dominant political and economic discourse still relies on the market for success. Incentives are being developed to create business opportunities that align with the sustainable development goals. However, funding for these projects ultimately depends on their potential profitability. As a result, economic growth is seen as a necessary condition for achieving the 2030 Agenda. This approach leaves culture and the arts behind, as they are difficult to commodify. The artist job market highlights the tension between the democratic value of the arts and the values of the capitalist system. This challenge is seen in both the field of cultural economics and in discussions of culture's role in meeting the 2030 Agenda's sustainable development goals. To address this, the study proposes incorporating culture into a funding strategy not based on the private market by using the employer of last resort or job guarantee policy for future applications. This will redirect focus from the economic value of the arts to their value for human development, ultimately realizing the goals set by the 2030 Agenda. [ABSTRACT FROM AUTHOR]

In this paper we present a response mechanism to the COVID-19 pandemic consistent with the previous empirical literature that emerged during the Great Recession, although not with the underlying ontology. Therefore, we analyze the principle of the endogeneity of money and argue how the proposed mechanism, the Guaranteed Employment, is an institutional and functional solution that allows for overcoming the limitations of the mechanisms used during the Great Recession. This is a further step towards closer coordination between the Central Bank and the Treasury, which has certainly proven essential for financial stability since the international financial crisis of 2007-2008, and which must also encompass macroeconomic stability to cope with the current and future challenges we face as a society: today it is the pandemic, but tomorrow it will be climate change.

This paper presents a preliminary comparison of the Eurosystem response to the Global Financial Crisis and Eurozone Crises with the onset of the Coronavirus Pandemic in 2020. It analyzes bank, national central bank (NCB), and government balance sheets to show the effect of ECB decisions to consrain or enable liquidity provision across the Eurozone, particularly along core and peripheral lines. It argues that these dynamics reflect Post-Keynesian theories of endogenous money, and the potential for monetary authorities to structurally influence liquidity preference and provision. As Eurozone governments debate whether to continue these practices, systemic liquidity crises that hurt financial and fiscal activity remain a risk at the time of writing.

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Il libro di Baglioni sulla politica monetaria (Le frontiere della politica monetaria – Dal Quantitative Easing ai tassi negativi, Milano, 2021) è molto informativo e un buon sussidio didattico. In questo “review article” muoviamo alcune critiche costruttive. La prima riguarda il background macroeconomico mainstream alla politica monetaria e il richiamo a un maggiore pluralismo, anche per ragioni didattiche. La seconda critica concerne l’incompleto endorsement dell’endogenità della moneta, inclusa una critica esplicita di analisi tradizionali diffuse nei libri di testo di macroeconomia come la teoria dei fondi prestabili, il moltiplicatore monetario, l’idea che la banca centrale controlli i tassi di interesse manovrando l’offerta di moneta. Suggeriamo infine una più completa illustrazione delle cause della crisi finanziaria europea e della governance incompleta dell’eurozona come background delle politiche monetarie della BCE.

The aim of this article is to present the impact of digitalisation on the intensification of land grabbing in the Global South in the context of the profound changes that have taken place in the world since the 1970s that have led to the emergence of rentier capitalism. The article shows that it is impossible to understand the scale of land grabbing driven by digitalisation without setting it in the context of the root causes of financialisation, that is, not only the achievements of the fourth industrial revolution, but also the spread of neoliberalism and the endogenous creation of money. It was pointed out that in order to solve the problem of land grabbing in the Global South, internationally coordinated actions should be taken to minimise the risks resulting both from the implementation of digital tools and technologies in the area of land administration and management, and from the promotion of free market principles in land trade and unlimited ex nihilo "production" of money used for investments in the land sector. [ABSTRACT FROM AUTHOR]

Financial crises have become a challenge for sustainable growth, given the frequency and intensity of crisis shocks and their destructive consequences in recent decades. The paper aims to study how the endogenously generated excess money supply can contribute to global financial crises. The creation of money supply is examined from the perspective of the Quantity Theory of Money (QTM) and endogenous money, namely Horizontalism, Structuralism, and Modern Money Theory. Given that prices are not flexible in the short term, increased volatility in the money market prevents a short-term ready balance between money supply and output. The overall result of money supply accommodation can be unpredictable if monetary authorities and commercial banks do not pool their interests, and the money demand volatility becomes extremely high. The study of the correlation between money supply and output allowed distinguishing between neutral countries in the creation of extra liquid assets and countries that can be a potential trigger for excessive money supply volatility. Monitoring the dynamics of M3 and GDP showed that before the significant crisis periods of 1997–1998, 2007–2008, and 2019–2020, the growth of money supply was more than 8%. The established critical level confirms the potential contribution of endogenously created excess money supply to global financial crises.

This paper outlines Carl Menger's theory of monetary evolution through a network science perspective. Drawing on the works of Price (1976) and Barabasi and Albert (1999) among others, parallels are drawn between Menger's account of a tradable good emerging as one half of every exchange and the mechanisms by which certain papers rise to the top of a citation list or how certain websites are vastly more popular than others. This phenomenon of spontaneous self-organization into a hub-and-spoke network is known as preferential attachment. I argue that by viewing the endogenous emergence of money as a preferential attachment process, monetary economics could be enriched. Finally, this paper highlights the spontaneous self-organization of complex trade networks leading to the creation of a medium of exchange as evidence to bolster the classical liberal perspective while cautioning against attempts to build such complex networks from the top down. [ABSTRACT FROM AUTHOR]

In recent decades, the inflation phenomenon has been one of the most important issues for Iranian economy. Regardless of its effects on economy, identifying the determinants of inflation has always been a challenge in all economies. Therefore, in order to compare the endogenous money theory with the quantity theory of money, this study analyzes the relationship between inflation and its determinants. To this end, the spectral analysis approach at high and low frequencies is applied during the period 1991: Q1 to 2018: Q1. The results show that there is the causality relationship from the growth of liquidity towards inflation as well as from inflation to liquidity in the short- term and long-term. In addition, there is the causality relationship from the monetary base growth to inflation in the long-term, while this causal relationship runs from monetary base growth towards inflation in the short-term. Moreover, the causality relationship from money multiplier growth to inflation is confirmed in the long-term. Consequently, the causes of inflation are different in the short- and long-term.

This article outlines the main points of full agreement between Wynne Godley and I. These explain why we managed to complete the task of writing our book Monetary Economics. The main points are the following: we had an identical conception of pricing procedures and the lack of impact of demand on prices relative to normal unit costs; we both had identified the compensation thesis in our previous work, that is, the belief that balance-of-payment surpluses have no impact on the stock of high-powered money in an economy set in a fixed-exchange-rate regime, in contrast to the Mundell–Fleming model; we both held very similar views about the endogeneity of the money supply and the essential role of banks versus the rest of the financial institutions; and finally, we both held a view of the monetary production economy that was in line with that presented by French circuit theorists and Augusto Graziani. This last point is developed in more detail, as it is pointed out that a number of scholars now combine the stock-flow consistent approach of Godley with the theory of the monetary circuit. [ABSTRACT FROM AUTHOR]

Purpose: The study seeks to examine the differences in the theoretical understanding between the two most dominant and recent schools of economic thought namely, the New Consensus Macroeconomics (NCM) School and the post-Keynesian school. Moreover, the study attempts to examine the practical implications for the Indian economy. Methodology/Approach: The study is based on a comprehensive literature review of major theoretical works of both the schools of thought and it tries to examine each nuance of differences in understanding which are likely to have significant implications for framing the macroeconomic policy in general and monetary policy in particular. Findings: The detailed examination of both the schools reveals that, despite some similarities, both have major differences in their theoretical understanding. They differ on the way by which money enters into the economy, causes of inflation, and the real and long-run effects of money. Moreover, the post-Keynesian understanding has been found to have a higher resemblance to the Indian economy. Limitations: Since the study aims at understanding the theoretical framework, the study is based on the literature review only and no empirical estimation has been attempted. Policy Implications: The paper establishes the theoretical argument that supports the money supply to be endogenous. So central banks cannot control the money supply exogenously. In developing countries like India, supply shocks do play a major role in influencing price level and simple monetary policy cannot effectively control it. Before framing the monetary policy, the real effects of money must be examined. All these have significant implications for Indian monetary policy. Originality/Value: The study would be a valuable addition to the understanding of the process of credit creation, working of the monetary policy, and determining factors of inflation and very few studies have ever tried to integrate all these ideas and compare each difference in their entirety. [ABSTRACT FROM AUTHOR]

We argue that even in the case that banks are able to maintain the interest rate at a level that they want (the most “radical” version of the theory of endogenous money), liquidity preference continues to constitute a key element when determining the real equilibrium of the economy. In a framework of endogenous money, the Keynesian theory of liquidity preference still constitutes a theory that determines level of income. Financial markets matter, and the Kaldorian idea that liquidity preference “ceases to be of any importance” can only be defended under a set of very restrictive assumptions.

In a recent article of this journal, Claudio Sardoni ([2019]. 'Investment and Saving in a Dynamic Context: The Contribution of Athanasios (Tom) Asimakopulos.' Review of Political Economy 31 (2): 233–246) made four claims: (1) An increase in the propensity to save will lower the long-term interest rate; (2) A higher preference for bonds will lead to lower long-term interest rates; (3) A higher level of investment will lead to a higher long-term interest rate; (4) A larger (exogenous) supply of money will lead to a lower long-term interest rate. We confront these four claims with the help of a simple stock-flow consistent (SFC) model which includes firms, banks and households, with the latter holding either bank deposits or bonds issued by firms, while these firms invest in fixed capital and in inventories. We find that higher investment leads to higher interest rates on bonds in the short run, but not in the medium or long run. Similarly, a higher desired inventories-to-output ratio ends up leading to lower interest rates both in the short and the long run. We conclude that using SFC models is particularly adequate when dealing with issues that integrate real and financial variables. [ABSTRACT FROM AUTHOR]

Modern Money Theory (MMT) describes the functioning of a pure credit economy, assuming that the state can finance public spending via monetisation on the part of the central bank: in this light MMT proponents maintain that taxation and bond issues are irrelevant to public deficit financing. Another feature peculiar to MMT is the belief that expansionary fiscal policies can guarantee full employment in a condition where the state acts as an employer of last resort (ELR). The aim of this paper is threefold: (a) to understand and rationalise the logical framework of MMT (Section 2.1); (b) to address some of the controversial issues of this approach, with particular regard to the ELR programme proposal and to the actual role played by taxation and bonds in public deficit financing (Section 2.2); (c) to propose an extension of the ELR programme, arguing that it can be used for the application of innovations by the state (Section Three). [ABSTRACT FROM AUTHOR]

This paper purports to show that a very specific theory of money underlies the way in which shadow banking is understood by most economists as well as the regulatory changes that arises from their understanding of the phenomenon. It demonstrates that the "shadow banking" metaphor implicitly relies on an erroneous conception of banking according to which banks are mere intermediaries of loanable funds. An alternative conception of shadow banking is proposed, based on the theory of endogenous money, where banks play a unique and very special role. The paper provides another comprehension of the purpose of the shadow banking system within the overall financial system, which leads to quite different regulatory proposals. [ABSTRACT FROM AUTHOR]