Search results for "endogenous money"
showing 10 items of 14 documents
Monetary Plurality in Economic Theory
2018
The objective of this article is to identify the monetary plurality in economic theory. We will try to throw light on the way in which theories are attracted towards both unicity and plurality, and more specifically by unification and diversification of money. It should also be noted, in this respect, that the economics of money has undergone considerable development since the 1970s. A survey of the diverse theories, whether mainstream or not, static or dynamic, holistic or individualistic, will reveal the surprising amount of attention devoted to the problem of monetary unicity and/or plurality. We base our presentation on two lines of thought: -The first of these lines concerns a situatio…
Teorías monetarias poskeynesianas: una aproximación de la escuela francesa
2009
Este texto es una presentación sintética de las características esenciales de las teorías monetarias poskeynesianas. Deseamos mostrar que, en el marco institucional actual, éstas constituyen una herramienta útil para aprehender el funcionamiento de nuestras economías monetarias. Al descomponer las relaciones entre las esferas financiera y productiva, los poskeynesianos justifican la necesidad de promover una regulación monetaria y financiera. En el análisis se ve con claridad que la política monetaria no debe estar exclusivamente dedicada a la lucha contra la inflación, además de que el gran desentendimiento del Estado no deja exenta de riesgos a la estabilidad del sistema en su totalidad.
Monetary circulation, the paradox of profits, and the velocity of money
2007
Recent papers have reconsidered the paradox of profits, that is the difficulty to explain how monetary profits can be generated when firms borrow only the wage bill to finance their production. In this article, we use a stock-flow consistent approach give a solution to this paradox assuming that, when firms sell goods at prices which exceed their unit costs, the realised monetary profits are not used to pay back banks. These profits then remain in the circuit, allowing additional transactions. In a sense, profits result from their own expenditure. According to this interpretation, the velocity of money is higher than one because some monetary units are used in several transactions of goods.
Money and equity returns in the Euro area
2010
Abstract This study examines the impacts of liquidity on equity returns in the euro area during the period 1987–2001. The main contribution of the study is that the money demand is carefully considered while estimating the liquidity. We provide evidence that in part the impact of money on equity returns depended on the measure used for liquidity (real money supply, real money gap and monetary overhang). However, a unanimous inference was made that over time an increase in liquidity has a negative impact on equity returns. This is interpreted as being due to the positive impact of money on inflation. Accordingly, an increase in liquidity generated expectations of inflation, which led to a de…
Where Did the Money Go? Endogenous Money Creation for International Fraudulent Purposes - The Case of the 2015 Moldovan Banking Scandal
2015
On Monday 4 May 2015, the speaker of Parliament of the Republic of Moldova published the Kroll report on his Internet blog after thousands of people rallied on Sunday 3 May in the capital, Chisinau, to protest against endemic corruption in the country, and demand recovery of the missing billions in the Ilan Shor group scandal. The Kroll report aims at investigating the apparent theft of nearly one-fifth of the country's annual GDP. In a spectacular lender-of-last resort move, the Moldovan central bank was forced to issue some 16 billion lei ($870 million) in emergency loans to keep the economy afloat. The Kroll report focuses on three commercial banks that account for a third of the country…
Money and the natural rate of interest: structural estimates for the United States and the Euro area
2008
We examine the role of money, allowing for three competing environments: the New Keynesian model with separable utility and static money demand; a non-separable utility variant with habit formation; and a version with adjustment costs for holding real balances. The last two variants imply forward-looking behavior of real money balances, as it is optimal for agents to allow their forecast of future interest rates to affect current portfolio decisions. We distinguish between these specifications by conducting a structural econometric analysis for the U.S. and the euro area. FIML estimates confirm the forward-looking character of money demand. Using these estimates we find that, in response to…
An Example: Money
1995
The institution of money, like that of language, or that of the State, has often been seen to be based on some kind of contractual agreement. Aristotle describes the nature of money as follows: Money has become by convention a sort of representative of demand; and that is why it has the name ‘money’ (nomisma) because it exists not by nature but by law (nomos) and it is in our power to change it and make it useless. (Ethica Nicomachea, V.5.II33a) The word nomos is ambiguous: in another translation of Ethica it has been translated as “custom”. This ambiguity reflects a theoretical problem in the classical social theory: money has been seen either as a result of an act of will of the legislato…
The impact of multinational banking on domestic banking
2006
Post-Keynesians have made endogenous money a central argument in their theory of output. Indeed, production cannot be undertaken if access to finance, usually meaning bank credit, does not exist. Such access is needed if wages are to be paid, and inputs of production purchased. In a monetary economy, therefore, money is created at the demand of borrowers, supplied by banks.
Joan Robinson and Keynes: finance, relative prices and the monetary circuit.
2003
Joan Robinson's views on credit and money are discussed only rarely. Of late, however, some Post-Keynesians have sought to revive these views, claiming that Robinson was one of the original contributors to the theory of endogenous money, post Keynes. This paper has two objectives. First, it seeks to develop Robinson's views on credit, money and finance and to show that not only did she have a clear understanding of the theory of endogenous money, but that she also held views akin to the theory of the monetary circuit. Second, the paper addresses Robinson's dismissal of the problem of relative prices and the conventional theory of value. Once again, it shows that Robinson's position is conne…
The New Consensus and Post-Keynesian Interest Rate Policy.
2007
Abstract This paper outlines the fundamental arguments of the New Consensus, critiques it from a Post-Keynesian perspective, and offers a Post-Keynesian alternative to the Taylor Rule. While Post-Keynesian economics provides a theory of endogenous money with exogenous interest rates, it has no clear description of a central bank reaction function. We attempt to remedy this oversight by identifying some of the difficulties attached to developing a Post-Keynesian reaction function, and suggesting an approach to the setting of interest rates that is more consistent than the Taylor Rule with Keynes's General Theory.