A comment on â€˜Endogenous money and effective demandâ€™: a revolution or a step backwards?
Steve Keen argues that post-Keynesians have not sufficiently emphasized the revolutionary character of endogenous money for macroeconomic theory, and that this should be done by recognizing that aggregate demand is equal to current or past income plus the change in debt. This equation, attributed in particular to Hyman Minsky, is discussed and questioned, and it is recalled that a similar equation had been proposed by Alfred Eichner. The consequences of bank credit for firms or households are further analysed within the context of the national accounts, and it is shown that one does not need a redefinition of aggregate demand and aggregate supply, in contrast to what is proposed by Keen.
References listed on IDEAS
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- Giancarlo Bertocco, 2013.
"On Keynes's Criticism of the Loanable Funds Theory,"
Review of Political Economy,
Taylor & Francis Journals, vol. 25(2), pages 309-326, April.
- Giancarlo Bertocco, 2009. "On Keynes’s criticism of the Loanable Funds Theory," Economics and Quantitative Methods qf0904, Department of Economics, University of Insubria.
- Giovanni Bernardo & Emanuele Campiglio, 2014. "A simple model of income, aggregate demand and the process of credit creation by private banks," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(3), pages 381-405, August.
- Giovanni Bernardo & Emanuele Campiglio, 2013. "A Simple Model of Income, Aggregate Demand, and the Process of Credit Creation by Private Banks," Economics Working Paper Archive wp_777, Levy Economics Institute.
- Steve Keen, 2014. "Endogenous money and effective demand," Review of Keynesian Economics, Edward Elgar Publishing, vol. 2(3), pages 271-291, July.
- Robinson, Joan, 1970. "Quantity Theories Old and New," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 2(4), pages 504-512, November.
- Jacques Le Bourva, 1962. "Création de la monnaie et multiplicateur du crédit," Revue Économique, Programme National Persée, vol. 13(1), pages 29-56.
- Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-115, March.
- Fabian Lindner, 2015. "Does Saving Increase the Supply of Credit? A Critique of Loanable Funds Theory," World Economic Review, World Economics Association, vol. 2015(4), pages 1-1, February.
- Fabian Lindner, 2013. "Does Saving Increase the Supply of Credit? A Critique of Loanable Funds Theory," IMK Working Paper 120-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
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