Material prepared for the lectures delivered at the PhD in Quantitative Methods for Economic Policy, University of Macerata, February 3-4, 2025.
Table of Contents
Lecture A – The monetary circuit theory
___A1 – The endogenous money view
___A2 – Presuppositions of the MCT
___A3 – A simple MCT model
___A4 – Distribution in a MCT model
___A5 – Policy implications
Lecture B – Stock-flow consistent models in economic research
___B1 – Introduction to SFC models
___B2 – Model PC
___B3 – Model BMW
___B4 – Model IO-PC
___B5 – Model ECO-IO-PC
Suggested readings
Lecture A The Monetary Circuit Theory
A1 The Endogenous Money View
A1.1 Introduction
The (Italian strand of the) Monetary Circuit Theory (MCT) is the culmination of a research line initiated by Augusto Graziani in the late 1970s, but only fully developed during the following decade. The MCT offers an original reinterpretation of some of the most significant aspects of Karl Marx’s analysis, which resembles heterodox monetary views within the history of 20th-century economic thought.
This perspective draws on a subterranean strand of studies originating from Knut Wicksell’s Interest and Prices (1898), progressing through the Swedish School and the works of Hahn and Robertson, and culminating in Schumpeter’s monetary works and Keynes’s Treatise on Money (1930). However, it is primarily to the works of certain French authors, notably Jaques Le Bourva and especially Bernard Schmitt, that the first attempt to construct a general macro-monetary theory, as an alternative and rival to traditional doctrine, can be attributed.
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