IDEAS home Printed from https://ideas.repec.org/a/elg/rokejn/v1y2013i2p210-229.html
   My bibliography  Save this article

Endogenous money: the evolutionary versus revolutionary views

Author

Listed:
  • Louis-Philippe Rochon

    (Laurentian University)

  • Sergio Rossi

    (University of Fribourg)

Abstract

The purpose of this paper is to shed light on the endogenous nature of money. Contrary to the established post-Keynesian, or evolutionary, view, this paper argues that money has always been endogenous, irrespective of the historical period. Instead of the evolutionary theory of money and banking that can be traced back to Chick (1986), this paper puts forward a revolutionary definition of endogenous money consistent with many aspects of post-Keynesian economics as well as with the monetary circuit approach. This alternative starting point leads to the conclusion that money is indeed ‘always and everywhere’ an endogenous phenomenon. This analysis rests on the nature of debt, the essential role of a settlement institution, and the link between production, money and income.

Suggested Citation

  • Louis-Philippe Rochon & Sergio Rossi, 2013. "Endogenous money: the evolutionary versus revolutionary views," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(2), pages 210-229, January.
  • Handle: RePEc:elg:rokejn:v:1:y:2013:i:2:p210-229
    as

    Download full text from publisher

    File URL: http://www.elgaronline.com/view/journals/roke/1-2/roke.2013.02.04.xml
    Download Restriction: no

    References listed on IDEAS

    as
    1. Mark Setterfield, 2007. "Is There a Stabilizing Role for Fiscal Policy in the New Consensus?," Review of Political Economy, Taylor & Francis Journals, vol. 19(3), pages 405-418.
    2. Malinowski, Bronislaw, 1921. "The Primitive Economics of the Trobriand Islanders," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 31, pages 1-16.
    3. Marc Lavoie, 1992. "Foundations of Post-Keynesian Economic Analysis," Books, Edward Elgar Publishing, number 275.
    4. Lavoie, Marc, 1999. "The Credit-Led Supply of Deposits and the Demand for Money: Kaldor's Reflux Mechanism as Previously Endorsed by Joan Robinson," Cambridge Journal of Economics, Oxford University Press, vol. 23(1), pages 103-113, January.
    5. Burdekin, Richard C K & Burkett, Paul, 1992. "Money, Credit, and Wages in Hyperinflation: Post-World War I Germany," Economic Inquiry, Western Economic Association International, vol. 30(3), pages 479-495, July.
    6. Bala Shanmugam & Mahendhiran Nair & Ong Wee Li, 2003. "The endogenous money hypothesis: empirical evidence from Malaysia (1985-2000)," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 25(4), pages 599-611.
    7. Howells, Peter & Hussein, Khaled, 1998. "The Endogeneity of Money: Evidence from the G7," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(3), pages 329-340, August.
    8. Jacques Le Bourva, 1962. "Création de la monnaie et multiplicateur du crédit," Revue Économique, Programme National Persée, vol. 13(1), pages 29-56.
    9. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-115, March.
    10. Basil J. Moore, 1983. "Unpacking the Post Keynesian Black Box: Bank Lending and the Money Supply," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 5(4), pages 537-556, July.
    11. Laidler, David E W & Parkin, J Michael, 1975. "Inflation: A Survey," Economic Journal, Royal Economic Society, vol. 85(340), pages 741-809, December.
    12. Claude Gnos & Louis-Philippe Rochon, 2003. "Joan Robinson and Keynes: finance, relative prices and the monetary circuit," Review of Political Economy, Taylor & Francis Journals, vol. 15(4), pages 483-491.
    13. Peter Kriesler & Marc Lavoie, 2007. "The New Consensus on Monetary Policy and its Post-Keynesian Critique," Review of Political Economy, Taylor & Francis Journals, vol. 19(3), pages 387-404.
    14. Stephen Rousseas, 1989. "On the Endogeneity of Money Once More," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 11(3), pages 474-478, March.
    15. Claude Gnos & Louis-Philippe Rochon, 2002. "Money Creation and the State : A Critical Assessment of Chartalism," International Journal of Political Economy, Taylor & Francis Journals, vol. 32(3), pages 41-57.
    16. Davidson, Paul & Weintraub, Sidney, 1973. "Money as Cause and Effect," Economic Journal, Royal Economic Society, vol. 83(332), pages 1117-1132, December.
    17. Louis-Philippe Rochon, 2001. "Cambridge's Contribution to Endogenous Money: Robinson and Kahn on credit and money," Review of Political Economy, Taylor & Francis Journals, vol. 13(3), pages 287-307.
    18. Chick, Victoria & Dow, Sheila C, 2001. "Formalism, Logic and Reality: A Keynesian Analysis," Cambridge Journal of Economics, Oxford University Press, vol. 25(6), pages 705-721, November.
    19. Basil J. Moore, 1979. "The Endogenous Money Stock," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 2(1), pages 49-70, October.
    20. Philip Arestis & Malcolm Sawyer, 2004. "On the Effectiveness of Monetary Policy and of Fiscal Policy," Review of Social Economy, Taylor & Francis Journals, vol. 62(4), pages 441-463.
    21. Jean-Michel Servet & Bernard Courbis & Éric Froment, 1991. "Enrichir l'économie politique de la monnaie par l'histoire," Revue Économique, Programme National Persée, vol. 42(2), pages 315-338.
    22. Alfonso Palacio Vera, 2001. "The Endogenous Money Hypothesis: Some Evidence from Spain (1987–1998)," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 23(3), pages 509-526, March.
    23. Sergio Rossi, 2004. "Inflation Targeting and Sacrifice Ratios : The Case of the European Central Bank," International Journal of Political Economy, Taylor & Francis Journals, vol. 34(2), pages 69-85.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cahen-Fourot, Louison & Lavoie, Marc, 2016. "Ecological monetary economics: A post-Keynesian critique," Ecological Economics, Elsevier, vol. 126(C), pages 163-168.
    2. Richters, Oliver & Siemoneit, Andreas, 2016. "Consistency and stability analysis of models of a monetary growth imperative," VÖÖ Discussion Papers 1/2016, Vereinigung für Ökologische Ökonomie e.V. (VÖÖ).
    3. Richters, Oliver & Siemoneit, Andreas, 2017. "Fear of stagnation? A review on growth imperatives," VÖÖ Discussion Papers 6/2017, Vereinigung für Ökologische Ökonomie e.V. (VÖÖ).
    4. Eugenio Caverzasi & Daniele Tori, 2018. "The Financial Innovation Hypothesis: Schumpeter, Minsky and the sub-prime mortgage crisis," LEM Papers Series 2018/36, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Ho Dong Ching, 2011. "Endogenous Money - A Structural Model of Monetary Base," Occasional Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number occ52, April.
    6. Pesenti, Amos, 2015. "The origin of inflation in a domestic bank-based payment system," FSES Working Papers 457, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    7. Jiří Štekláč, 2015. "Politicko-ekonomické varianty vyhlazování hospodářského cyklu v soudobých úvěrových ekonomikách
      [Political-Economic Options for Smoothing of Business Cycles within the Current Credit-Economy]
      ," Politická ekonomie, University of Economics, Prague, vol. 2015(1), pages 3-31.
    8. Léo MALHERBE, 2017. "Endogenous money: an heterodox synthesis (In French)," Cahiers du GREThA 2017-08, Groupe de Recherche en Economie Théorique et Appliquée.

    More about this item

    Keywords

    banks; endogenous money; monetary analysis;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:elg:rokejn:v:1:y:2013:i:2:p210-229. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Katie Smith). General contact details of provider: http://www.elgaronline.com/roke .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.