Debt, Finance, Production and Trade in a North-South Model: The Surplus Approach

William Darity

Cambridge Journal of Economics, 1987, vol. 11, issue 3, 211-27

Abstract: This paper presents a short-period North-South model based upon the surplus approach formalized by Piero Sraffa. Its major innovation is the introduction of a unified international banki ng sector, patterned after the Euro-banking system, that creates cred it as a multiple of deposits received from each region. The model fac ilities investigation of "crowding out" and "crowding in" within and across regions, interregional and intraregional competition for c redit, and the origins of debt crises, including the Brimmer-Kindlebe rger commercial bank "loan pushing" phenomenon. The model also is c ompared briefly with other recent explanations for the developing-cou ntry debt trauma. Copyright 1987 by Oxford University Press.

Date: 1987
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