The Theory of the Monetary Circuit

A. Graziani

Chapter 6 in Money and Production, 2024, pp 111-140 from Edward Elgar Publishing

Abstract: The theory of the circuit faces the fundamental question of any macroeconomic theory, namely how the level of activity of an economic system is determined and what determines the distribution of the social dividend among the main social groups. The basic idea is that, in a wage economy, possession of wealth as such does not imply being admitted to a share of real income. Since access to money and credit is a key factor in a wage economy, producers of money and credit enjoy a privileged position and are admitted as such to a share of total product. It is therefore a typical aspect of the theory of the monetary circuit that in any macroeconomic model, banks and firms can never be merged into one single sector.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2024
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