Equilibrium Model in a Monetary Economy
AbstractThe paper consists of three parts. In the first part a monetary economy, based on credit money, is introduced. All financial instruments are considered as substitutes for money. In the second part the possibility of equilibrium convergence, under certain conditions, is studied. The conclusion is that that the equilibrium convergence requires monetary velocity acceleration. The velocity of money is introduced as complex variable derived as a solution of a matrix equation and implying the existence of closed money circulation cycles. The third part is dedicated to the interplay between the real and the financial sectors under the process of equilibrium convergence and economic stabilization. Keynesian, monetarist and real business cycle type of stabilization are studied. The conclusion about the possibility of the destabilizing role of the financial sector is drawn.
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Bibliographic InfoArticle provided by Bulgarian Academy of Sciences - Economic Research Institute in its journal Economic Thought.
Volume (Year): (2010)
Issue (Month): 5 ()
Find related papers by JEL classification:
- E19 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Other
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- Broecker, Thorsten, 1990. "Credit-Worthiness Tests and Interbank Competition," Econometrica, Econometric Society, vol. 58(2), pages 429-52, March.
- Bhattacharya Sudipto & Thakor Anjan V., 1993. "Contemporary Banking Theory," Journal of Financial Intermediation, Elsevier, vol. 3(1), pages 2-50, October.
- Yannis Panagopoulos & Aristotelis Spiliotis, 2008. "Alternative money theories: a G7 testing," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 30(4), pages 601-622, July.
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