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

Dirk Ehnts

International Journal of Pluralism and Economics Education, 2014, vol. 5, issue 3, 279-297

Abstract: 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.

Keywords: endogenous money; saving-investment imbalances; European Monetary Union; EMU; euro zone; macroeconomic imbalances; sectoral debt; current account; currency union; Keynesian cross; savings; investment; macroeconomic models; modelling; macroeconomics. (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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