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The characteristics of a monetary economy: a Keynes--Schumpeter approach

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  • Giancarlo Bertocco

Abstract

Mainstream monetary theory considers money only as an instrument meant to facilitate trading without having any effect on income or on the evolution of the economic system. The aim of this paper is to elaborate a monetary theory capable of supporting the thesis of money non-neutrality based on the arguments developed by Keynes and Schumpeter. The synthesis of the theories of these two great economists will be formulated starting from the two points which are common in the views of Keynes and Schumpeter. First, in contrast with mainstream theory, Keynes and Schumpeter state that the diffusion of a fiat money induces a radical modification into the way in which the economic system works. Second, when Keynes and Schumpeter describe the reasons why money and financial aggregates are not neutral, they highlight the fundamental role of the credit market and of banks; in contrast with the mainstream theory, they do not consider the credit market as the mirror image of the goods market. Copyright 2007, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Cambridge Journal of Economics.

Volume (Year): 31 (2007)
Issue (Month): 1 (January)
Pages: 101-122

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Handle: RePEc:oup:cambje:v:31:y:2007:i:1:p:101-122

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  1. Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-54, August.
  2. David H. Romer, 2000. "Keynesian Macroeconomics without the LM Curve," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 149-169, Spring.
  3. Jones, Robert A, 1976. "The Origin and Development of Media of Exchange," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 757-75, August.
  4. Giancarlo Bertocco, 2001. "Is Kaldor's Theory of Money Supply Endogeneity Still Relevant?," Metroeconomica, Wiley Blackwell, vol. 52(1), pages 95-120, 02.
  5. Friedman, Milton & Schwartz, Anna J., 1986. "Has government any role in money?," Journal of Monetary Economics, Elsevier, vol. 17(1), pages 37-62, January.
  6. Gravelle, T., 1995. "What is Old id New Again," UWO Department of Economics Working Papers 9501, University of Western Ontario, Department of Economics.
  7. Bertocco Giancarlo, 2002. "The role of credit in a Keynesian monetary economy," Economics and Quantitative Methods qf0222, Department of Economics, University of Insubria.
  8. Frederic S. Mishkin, 1999. "International Experiences with Different Monetary Policy Regimes," NBER Working Papers 6965, National Bureau of Economic Research, Inc.
  9. Lucas, Robert E, Jr, 1996. "Nobel Lecture: Monetary Neutrality," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 661-82, August.
  10. Arestis, Philip & Howells, Peter, 1996. "Theoretical Reflections on Endogenous Money: The Problem with 'Convenience Lending.'," Cambridge Journal of Economics, Oxford University Press, vol. 20(5), pages 539-51, September.
  11. Joseph E. Stiglitz & Andrew Weiss, 1988. "Banks as Social Accountants and Screening Devices for the Allocation of Credit," NBER Working Papers 2710, National Bureau of Economic Research, Inc.
  12. Miglierina Enrico & Molho Elena, 2002. "Well-posedness and convexity in vector optimization," Economics and Quantitative Methods qf0221, Department of Economics, University of Insubria.
  13. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
  14. Tobin, James, 1981. "Money and Finance in the Macro-Economic Process," Nobel Prize in Economics documents 1981-1, Nobel Prize Committee.
  15. Allan H. Meltzer, 2001. "Money and monetary policy: an essay in honor of Darryl Francis," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 23-32.
  16. Hicks, John, 1989. "A Market Theory of Money," OUP Catalogue, Oxford University Press, number 9780198287247, September.
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Cited by:
  1. Wäckerle, Manuel, 2013. "On the bottom-up foundations of the banking-macro nexus," Economics Discussion Papers 2013-5, Kiel Institute for the World Economy.
  2. Bruno Bonizzi, 2013. "Capital Flows to Emerging Markets: An alternative Theoretical Framework," Working Papers 186, Department of Economics, SOAS, University of London, UK.
  3. Bertocco Giancarlo, 2007. "The relationship between saving and credit from a Schumpeterian perspective," Economics and Quantitative Methods qf07013, Department of Economics, University of Insubria.
  4. Lucarelli, B., 2010. "Money and Keynesian Uncertainty," MPRA Paper 28862, University Library of Munich, Germany, revised 10 Feb 2011.
  5. Giancarlo Bertocco, 2011. "Finance and risk: does finance create risk?," Economics and Quantitative Methods qf1115, Department of Economics, University of Insubria.
  6. Bertocco Giancarlo, 2004. "Are banks really special? A note on the theory of financial intermediaries," Economics and Quantitative Methods qf04021, Department of Economics, University of Insubria.
  7. Villemeur, Alain, 2010. "Economic growth : a chain-reaction between increases in supply and increases in demand ?," Economics Papers from University Paris Dauphine 123456789/6516, Paris Dauphine University.
  8. Giancarlo Bertocco, 2011. "Global Saving Glut and housing bubble: a critical analysis," Economics and Quantitative Methods qf1112, Department of Economics, University of Insubria.
  9. Giancarlo Bertocco, 2011. "Housing bubble and economic theory: is mainstream theory able to explain the crisis?," Economics and Quantitative Methods qf1116, Department of Economics, University of Insubria.
  10. Passarella, Marco, 2011. "From the village fair to Wall Street. The Italian reception of Minsky’s economic thought," MPRA Paper 49593, University Library of Munich, Germany.
  11. Bertocco Giancarlo, 2006. "Some observations about the endogenous money theory," Economics and Quantitative Methods qf0602, Department of Economics, University of Insubria.

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