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A comment on Endogenous money and effective demand: a revolution or a step backward?

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  • Marc Lavoie

    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique, University of Ottawa [Ottawa])

Abstract

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.

Suggested Citation

  • Marc Lavoie, 2014. "A comment on Endogenous money and effective demand: a revolution or a step backward?," Post-Print hal-01343743, HAL.
  • Handle: RePEc:hal:journl:hal-01343743
    Note: View the original document on HAL open archive server: https://hal-univ-paris13.archives-ouvertes.fr/hal-01343743
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    Cited by:

    1. Jacob Assa, 2017. "Leveraged Growth: Endogenous Money and Speculative Credit in a Stock-flow Consistent Measure of Output," Working Papers 1727, New School for Social Research, Department of Economics.

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