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A simple macroeconomic model of a currency union with endogenous money and saving-investment imbalances


  • Dirk H. Ehnts


The great financial crisis has triggered new economic thinking about the functioning of an economy, and in the European case, of a currency union. Explanations of the macroeconomic relations inside a currency union are therefore in demand. It is now widely understood that sectoral debt and the current account should be part of a model. Traditional textbook models, like the IS-LM-BP or the IS-MR-PC models, respectively, are found lacking on the monetary or the real side, or both. This paper develops a model in order to fill this gap by constructing a simple model featuring endogenous money and saving-investment imbalances.

Suggested Citation

  • Dirk H. Ehnts, 2014. "A simple macroeconomic model of a currency union with endogenous money and saving-investment imbalances," International Journal of Pluralism and Economics Education, Inderscience Enterprises Ltd, vol. 5(3), pages 279-297.
  • Handle: RePEc:ids:ijplur:v:5:y:2014:i:3:p:279-297

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