Functional Finance: What, Why, and How?

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Functional Finance: What, Why, and How?

Author Info

Stephanie Bell (University of Missouri at Kansas City)

Abstract

The purpose of this paper is threefold. First, the theory of functional finance, as explicated by its originator, Abba P. Lerner, is put forward. Second, the reader is introduced to the use, standard in money and banking texts, of T-account balance sheet entries. Although no important conclusions will rest solely on the reader's ability to cope with these entries, comfort with their use will ease the exposition. An appendix therefore is provided to assist those not yet exposed to this method of recording balance sheet changes and for those who merely wish to refresh themselves. The third purpose of the paper is to demonstrate the need for policies governed by the principles of functional finance.

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Paper provided by EconWPA in its series Macroeconomics with number 0004031.

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Length: 30 pages
Date of creation: 11 Oct 2000
Date of revision:
Handle: RePEc:wpa:wuwpma:0004031

Note: Type of Document - Adobe Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 30; figures: included
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E - Macroeconomics and Monetary Economics

This paper has been announced in the following NEP Reports:

NEP-ALL-2001-02-14 (All new papers)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Smith, Bruce D. & Villamil, Anne P., 1998. "Government borrowing using bonds with randomly determined returns: Welfare improving randomization in the context of deficit finance," Journal of Monetary Economics, Elsevier, vol. 41(2), pages 351-370, April. [Downloadable!] (restricted)
Other versions:
- Smith, B.D. & Villamil, A.P., 1991. "Government Borrowing using Bonds with Randomly Determined Returns : Welfare Improving Randomization in the Context of Deficit Finance," RCER Working Papers 287, University of Rochester - Center for Economic Research (RCER).
Wynne Godley, 1999. "Seven Unsustainable Processes: Medium-Term Prospects and Policies for the United States and the World," Economics Strategic Analysis Archive 99-10, Levy Economics Institute, The. [Downloadable!]
Ludvigson, Sydney, 1996. "The macroeconomic effects of government debt in a stochastic growth model," Journal of Monetary Economics, Elsevier, vol. 38(1), pages 25-45, August. [Downloadable!] (restricted)
Trostel, Philip A., 1993. "The nonequivalence between deficits and distortionary taxation," Journal of Monetary Economics, Elsevier, vol. 31(2), pages 207-227, April. [Downloadable!] (restricted)
Blinder, Alan S. & Solow, Robert M., 1973. "Does fiscal policy matter?," Journal of Public Economics, Elsevier, vol. 2(4), pages 319-337. [Downloadable!] (restricted)

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