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The “Solvency Rule†of the Central Banker in a Monetary Scheme of Reproduction

Author

Listed:
  • Emiliano Brancaccio

    (University of Sannio, Italy)

  • Domenico Suppa

    (University “Giustino Fortunato†, Italy)

Abstract

An alternative interpretation of monetary policy suggests that central bankers are not able to manage the business cycle and inflation. Rather, they set interest rates and other monetary policy variables in order to regulate the conditions of solvency in the economic system and the related tendency towards “centralization†of capital. This “solvency rule†of central banks is determined here within a two-sector monetary scheme of reproduction in which some restrictive assumptions contained in previous versions are removed. The main result of this scheme is that any sort of “neutrality†of monetary policy must be excluded, not only from the points of view of the scale of production or the distribution of income, but also from that of the solvency conditions and the related centralization of capital in each sector of the economic system.

Suggested Citation

  • Emiliano Brancaccio & Domenico Suppa, 2018. "The “Solvency Rule†of the Central Banker in a Monetary Scheme of Reproduction," Bulletin of Political Economy, Bulletin of Political Economy, vol. 12(1-2), pages 77-98, June.
    • Handle: RePEc:awu:journl:v:12:y:2018:i:1-2:p:77-98
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    References listed on IDEAS

    as
    1. Brancaccio, Emiliano & Giammetti, Raffaele & Lopreite, Milena & Puliga, Michelangelo, 2018. "Centralization of capital and financial crisis: A global network analysis of corporate control," Structural Change and Economic Dynamics, Elsevier, vol. 45(C), pages 94-104.
    2. Emiliano Brancaccio & Giuseppe Fontana, 2013. "'Solvency rule' versus 'Taylor rule': an alternative interpretation of the relation between monetary policy and the economic crisis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 37(1), pages 17-33.
    3. Brancaccio, Emiliano, 2008. "Solvency and Labour Effort in a Monetary Theory of Production," European Journal of Economic and Social Systems, Lavoisier, vol. 21(2), pages 195-211.
    4. Tony Aspromourgos, 2004. "Sraffian research programmes and unorthodox economics," Review of Political Economy, Taylor & Francis Journals, vol. 16(2), pages 179-206.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

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    More about this item

    Keywords

    Solvency Rule; Monetary Scheme of Reproduction; Surplus Approach; Monetary Circuit; Centralization of Capital;
    All these keywords.

    JEL classification:

    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models

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