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Dynamics of Endogenous money: just add banking realism to Loanable Funds

Summary:
Take Krugman’s Loanable Funds model of banking, add the realism that banks make loans to non-banks, and hey presto you get the real world of Endogenous Money, where change in debt (as well as change in velocity) affects aggregate demand. Illustrated with a simulation using Minsky software (download from https://sourceforge.net/p/minsky/).

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Take Krugman’s Loanable Funds model of banking, add the realism that banks make loans to non-banks, and hey presto you get the real world of Endogenous Money, where change in debt (as well as change in velocity) affects aggregate demand. Illustrated with a simulation using Minsky software (download from https://sourceforge.net/p/minsky/).


Steve Keen
Steve Keen (born 28 March 1953) is an Australian-born, British-based economist and author. He considers himself a post-Keynesian, criticising neoclassical economics as inconsistent, unscientific and empirically unsupported. The major influences on Keen's thinking about economics include John Maynard Keynes, Karl Marx, Hyman Minsky, Piero Sraffa, Augusto Graziani, Joseph Alois Schumpeter, Thorstein Veblen, and François Quesnay.

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