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

Marc Lavoie

Review of Keynesian Economics, 2014, vol. 2, issue 3, 321-332

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.

Keywords: bank credit; endogenous money; aggregate demand; time lags (search for similar items in EconPapers)
JEL-codes: E12 E44 E51 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

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