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Tag Archives: endogenous money

Marc Lavoie — A System With Zero Reserves And With Clearing Outside Of The Central Bank: The Canadian Case

Marc Lavoie — A System With Zero Reserves And With Clearing Outside Of The Central Bank: The Canadian CaseMarc Lavoie has a new paper in Review Of Political Economy in which he explains how the Bank of Canada, the central bank of Canada 🇨🇦 is able to maintain the target interest rate at the center of the corridor with high perfection despite zero reserve requirement and clearing happening privately.Abstract:In a number of ways, implementing monetary policy in Canada stands apart from monetary...

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Lars P. Syll — Schumpeter–an early champion of MMT

Keeper quote from Joseph Schumpeter. He nailed endogenous money as "credit money" and observed correctly how "money" gets created by banks' extending credit — "they create deposits in their act of lending." This effect is now amplified through non-bank and quasi-bank financial institutions. The contemporary financialized economy runs largely on privately created credit. This has an even greater effect than Schumpeter likely anticipated. Economists' ignoring this unduly limit the scope of...

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Elsewhere: Popular Writing On Modern Monetary Theory

Some articles: Josh Barro, in New York Magazine. Noah Smith, in Bloomberg. Linette Lopez, in Business Insider. Michael Strain, also in Bloomberg. I do not assert that all points in these articles are well-taken. I think of MMT as descriptive. It combines endogenous money, functional finance, and chartalism. Much of its empirical evidence consists of qualitative descriptions of how financial institutions and central banks operate. One can imagine a policy regime where unemployment and...

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Hans Gersbach — Sovereign money: A challenge for science

There has been an intense academic and policy debate on what monetary architecture is the most appropriate recently, but many issues are still unresolved. This column looks at the circumstances under which the current system and the sovereign money system yield the same outcomes, the core arguments in favour of the current system, and what advantages a sovereign money architecture might offer.... Vox.euSovereign money: A challenge for scienceHans Gersbach | Professor at CER-ETH - Center of...

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Basil Moore (1933-2018)

Basil Moore I first met Basil in 2000 or 2001, which was quite late, since I've read his work as an undergraduate back in the late 1980s. I was Assistant Director of the Center for Economic Policy Analysis (CEPA, now the Schwartz Center) at the New  School, and we invited him for a talk, which was about his forthcoming (at that time) book Shaking the Invisible Hand: Complexity, Endogenous Money and Exogenous Interest Rates  which was published considerably later (my review here).Basil...

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Brian Romanchuk — Primer: What Limits Bank Lending?

The unfortunate fact that bank deposits are considered money has one side effect: our mysticism about money extends towards banking. The apparent ability of banks to "create money out of thin air" seems unfair, and this leads to questions about what limits their ability to lend. The answer is a lot simpler than one might suspect. For any other business (with the possible exception of the resource industry), output is largely constrained by their ability to find customers that they can sell...

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La macroeconomia dopo la moneta endogena (Wonkish)

Appena pubblicato sui Working papers di Siena Bofinger and Ries versus Borio and Disyatat: macroeconomics after endogenous money. A brief note. Sergio Cesaratto Abstract A paper by Peter Bofinger and Mathias Ries (2017a/b) strays from the recent rethinking in monetary analysis to criticise Summers’ “saving glut” explanation of the prevalence of low real interest rates. A similar critical perspective is held by Borio and Disyatat (e.g. 2011a/b, 2015), who are criticised, however, by...

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New Book: Advances In Endogenous Money Analysis

There’s a nice new book titled, Advances In Endogenous Money Analysis, edited by Louis-Philippe Rochon and Sergio Rossi.There’s a great chapter on Nicholas Kaldor’s views on money over the years by John E. King and another by Marc Lavoie titled, Assessing Some Structuralist Claims Through A CoherentStock–Flow Framework. John E. King also discusses the importance of fiscal policy in Kaldor’s work:Kaldor continued to insist on the importance of fiscal policy. The first point in his...

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Beyond the traditional monetary circuit

Slow posting will continue the rest of the Summer. Here a paper by Sergio Cesaratto that might be of interest. From the abstract: The paper is a contribution to a long-run theory of effective demand with elements from monetary circuit theory, Modern Monetary Theory and endogenous finance analysis. Some shortcomings of the still influential neo-Kaleckian growth model and monetary circuit theory are underlined, and the Sraffian supermultiplier is indicated as the most promising heterodox...

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The theory of endogenous money and the LM schedule

By Tom Palley. From the abstract: Money is at the center of macroeconomics, which makes understanding the money supply central for macroeconomic theory. this paper presents the Post Keynesian theory of endogenous money supply and shows how it is fundamentally different from the conventional money supply theory. the conventional approach relies on the money multiplier and bank lending is invisible. Post Keynesian theory discards the money multiplier and focuses on bank lending which drives...

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