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On the bottom-up foundations of the banking-macro nexus

Manuel Wäckerle

No 2013-5, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: The complexity of credit money is seen as the central issue in the banking-macro nexus, which the author considers as a structural as well as a process component of the evolving economy. This nexus is significant for the stability/fragility of the economic system because it links the monetary domain with the real domain of economic production and consumption. The evolution of credit rules shapes economic networks between households, firms, banks, governments and central banks in space and time. The author discusses the properties and characteristics of this process in three sections. First, he discusses the origins of the theory of money and its role in contemporary monetary economics. Second, he briefly discusses current theoretical foundations of top-down and bottom-up approaches to the banking-macro nexus, such as DSGE or ABM. Third, he suggests an evolutionary framework, building on the generic-rule based approach, to arrive at standards for bottom-up foundations in agent-based models of the banking-macro nexus.

Keywords: 20th century origins of the theory of money; Schumpeterian credit-driven innovation; Post-Keynesian endogenous money; top-down versus bottom-up; evolutionary institutional approach to bank lending; generic credit rules as bottom-up foundations (search for similar items in EconPapers)
JEL-codes: B25 B52 C63 E41 E51 G21 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-ban, nep-cba, nep-hme, nep-hpe, nep-mac, nep-mon and nep-pke
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http://www.economics-ejournal.org/economics/discussionpapers/2013-5
https://www.econstor.eu/bitstream/10419/67949/1/734010257.pdf (application/pdf)

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