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The Role of credit in a Keynesian monetary economy

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  • Giancarlo Bertocco

Abstract

This paper describes the features of a monetary economy on the basis of Keynes's distinction between a real exchange economy and a monetary economy. In The General Theory, Keynes identifies the reasons for the non-neutrality of money by highlighting the store of wealth function of money; this approach has been adopted by most Keynesian economists. The aim of this paper is to show that such an approach only partially explains the reasons for money non-neutrality and that important elements which demonstrate the relevance of monetary variables emerge when the means of payment function of money is considered. Investigating the role of this function requires that we deal explicitly with how spending decisions are financed. The paper argues that the market for credit must be considered separately from the market for money, and that a viable credit theory can be built from Keynes's post-General Theory writings.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Review of Political Economy.

Volume (Year): 17 (2005)
Issue (Month): 4 ()
Pages: 489-511

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Handle: RePEc:taf:revpoe:v:17:y:2005:i:4:p:489-511

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Citations

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Cited by:
  1. Nazim Kadri Ekinci, 2013. "Income distribution in a monetary economy," PSL Quarterly Review, Economia civile, vol. 66(267), pages 435-455.
  2. Giancarlo Bertocco, 2007. "The characteristics of a monetary economy: a Keynes--Schumpeter approach," Cambridge Journal of Economics, Oxford University Press, vol. 31(1), pages 101-122, January.
  3. Giancarlo Bertocco, 2009. "The Relationship Between Saving and Credit from a Schumpeterian Perspective," Journal of Economic Issues, M.E. Sharpe, Inc., vol. 43(3), pages 607-640, September.
  4. M. Lopreite, 2012. "The endogenous money hypothesis and securitization: the Euro area case (1999-2010)," Economics Department Working Papers 2012-EP02, Department of Economics, Parma University (Italy).
  5. Jose A. Murillo & Sara G. Castellanos, 2004. "Inflation Dynamics’ Micro Foundations: How Important is Imperfect Competition Really?," Econometric Society 2004 Latin American Meetings 78, Econometric Society.
  6. Bertocco Giancarlo, 2003. "The economics of financing firms: the role of banks," Economics and Quantitative Methods qf0312, Department of Economics, University of Insubria.
  7. 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.
  8. Bruno Bonizzi, 2013. "Capital Flows to Emerging Markets: An alternative Theoretical Framework," Working Papers 186, Department of Economics, SOAS, University of London, UK.
  9. 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.

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