Equilibrium Model in a Monetary Economy
The 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 solution of a matrix equation and implying the existence of closed money circulation cycles. The third part is dedicated to 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 destabilizing role of financial sector is drawn.
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Volume (Year): (2010)
Issue (Month): 7 ()
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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.:
- Broecker, Thorsten, 1990. "Credit-Worthiness Tests and Interbank Competition," Econometrica, Econometric Society, vol. 58(2), pages 429-52, March.
- Gillman, M. & Siklos, P.L. & Silver, J.L., 1997.
"Money Velocity with Costly Credit,"
97-4, Wilfrid Laurier University, Department of Economics.
- 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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