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Loanable Funds vs. Endogenous Money: Krugman is Wrong, Keen is Right


  • Kakarot-Handtke, Egmont


In a recent article, Keen resumes the debate with Krugman about the effects of debt upon the economy. It is hard to see how the question can be settled as long as all participants apply their idiosyncratic models. Hence the issue boils down, as Krugman rightly put it, to the deeper question: “how should one do economics.” Sketched with a broad brush, the consensus is that Orthodoxy has failed and that Heterodoxy has no convincing alternative to offer. The conceptual consequence of the present paper is to restart from a firm common formal ground. This relocation makes the debate solvable.

Suggested Citation

  • Kakarot-Handtke, Egmont, 2014. "Loanable Funds vs. Endogenous Money: Krugman is Wrong, Keen is Right," MPRA Paper 53385, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:53385

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    References listed on IDEAS

    1. Kakarot-Handtke, Egmont, 2011. "Reconstructing the Quantity Theory (I)," MPRA Paper 32421, University Library of Munich, Germany.
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    More about this item


    new framework of concepts; structure-centric; axiom set; consumption economy; debt; Profit Law; simulation; market clearing; budget balancing;

    JEL classification:

    • B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G00 - Financial Economics - - General - - - General

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