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Beyond the traditional monetary circuit: endogenous money, finance and the theory of long-period effective demand

Sergio Cesaratto ()

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: The paper is a contribution to a long-run theory of effective demand with elements from monetary circuit theory, Modern Monetary Theory and endogenous finance analysis. Some shortcomings of the still influential neo-Kaleckian growth model and monetary circuit theory are underlined, and the Sraffian supermultiplier is indicated as the most promising heterodox approach to growth and instability in capitalism. The Sraffian supermultiplier allows full consideration of the autonomous components of aggregate demand as the ultimate sources of growth and instability in modern capitalism. Following Steindl, capital gains are included among these components. Autonomous demand and investment are typically fed by endogenous finance. The paper articulates the relation between autonomous demand and investment on one hand, and endogenous finance on the other, in the light of Keynes’s distinction between initial and final finance.

Keywords: Supermultiplier; endogenous money; monetary circuit theory; modern monetary theory; autonomous demand (search for similar items in EconPapers)
JEL-codes: B51 E11 E12 E42 E5 (search for similar items in EconPapers)
Date: 2017-07
New Economics Papers: this item is included in nep-hpe, nep-mac, nep-mon and nep-pke
References: View references in EconPapers View complete reference list from CitEc
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Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:757

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