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Money Creation, Employment and Economic Stability: The Monetary Theory of Unemployment and Inflation


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  • Alain Parguez

    (University of Besano006e, France)

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    This paper by building on the general theory of the monetary circuit, proves that money-as a pure bank credit liability-exists to overcome constraints on required expenditures by firms, household and mainly the State. From this perspective the paper derives the employment function in the modern monetary economy. Thereby it is explained that full employment policy is both always possible and required. It is proven that this conclusion holds in a perfectly open economy. Ultimately it is explained that there is no trade-off between full employment and sustainable price stability.

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    Bibliographic Info

    Article provided by Savez ekonomista Vojvodine, Novi Sad, Serbia in its journal Panoeconomicus.

    Volume (Year): 55 (2008)
    Issue (Month): 1 (March)
    Pages: 39-67

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    Handle: RePEc:voj:journl:v:55:y:2008:i:1:p:39-67

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    Related research

    Keywords: Money; Banks; Employment; Fiscal policy; Phillips curve; Inflation; Exchange rates; Deficit; Consumption; Investment;

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    Cited by:
    1. Massimo Cingolani & Nadia Garbellini & Ariel Wirkiermann, 2012. "Macroeconomic Developments and Medium-term Outlook for the Western Balkans and Croatia," Book Chapters, Institute of Economic Sciences.


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