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Moneta, finanza e crisi. Marx nel circuito monetario (Money, Finance and Crisis. Marx Within the Monetary Circuit)
Full text linkThe so-called "Theory of Monetary Circuit" not only represents an original Marxian rereading of Keynesian macroeconomic categories, but also provides an essential tool for the analysis (and the critique) of recent developments in capitalist economies, including the financialization process. Starting from a "circuitist" view, it is argued that the twin financial crises of 2000 and 2007 can be regarded as the "friction points" of the law of creation of value and surplus value (that still relies on the extension and intensification of the exploitation of the living labor in the production sphere) with the private realization of value created (i.e. the historically determined way of setting relative prices, including return rates on financial assets) under current financially sophisticated capitalist economies
The paradox of tranquility revisited. A Lotka-Volterra model of the financial instability
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From the village fair to Wall Street. The Italian reception of Minsky's economic thought
No full textUnconventional Monetary Policies from Conventional Theories: Modern Lessons for Central Bankers
Full text linkThe aim of this paper is to provide a critical review of some recent developments in macroeconomics. We discuss the introduction of financial frictions in New Keynesian models, which is said to account for the increasing influence of financial markets, institutions and products in real-world economies. For this purpose, we compare the macro dynamics of a benchmark NCM-DSGE model with the behaviour of the same model augmented with a financial accelerator mechanism. Our simulation exercises show that the financial accelerator mechanism can be regarded as an effective, though indirect, way to account for hysteresis in potential output. A fundamental policy corollary follows that central banks should pursue financial stability, rather than price stability, and target current output growth, rather than output gap. Such an unconventional result is obtained by a simple macroeconomic amendment to an otherwise conventional NCM-DSGE model
The monetary circuit in the age of financialisation. A stock-flow consistent model with a twofold banking sector
No full textThe paper explores how the Theory of Monetary Circuit can be developed to reflect some important features of the evolution of the financial system in the past three decades, which have been associated with what may be termed ‘financialisation.’ For this purpose, we embed the benchmark single-period monetary circuit scheme proposed by Graziani in a richer set of institutional arrangements. The stock-flow consistent modelling technique pioneered by Godley and Lavoie is used to support our narrative
Financialization and the monetary circuit : a macro-accounting approach
Full text linkThis paper aims to cross-breed the standard monetary circuit accounting model with elements from the Post-Keynesian literature. The goals are: (i) to analyse the implications of credit-based household consumption fed by capital asset inflation for the soundness of a pure credit-money economy of production; and (ii) to provide a more sophisticated description of the working of modern financial systems than the one grounded in the usual 'bank-based vs. market based' distinction
A simplified stock-flow consistent dynamic model of the systemic financial fragility in the 'New Capitalism'
Full text linkIn the last few years, many financial analysts and heterodox economists (but even some ‘dissenters’ among orthodox economists) have referred to the contribution of Hyman P. Minsky as fundamental to understanding the current crisis. However, it is well-known that the traditional formulation of Minsky’s ‘financial instability hypothesis’ shows serious internal logical problems. Furthermore, Minsky’s analysis of capitalism must be updated on the basis of the deep changes which, during the last three decades, have concerned the world economy. In order to overcome these theoretical and empirical troubles, this paper, first, introduces the reader to the ‘mechanics’ of the financial instability theory, according to the formulation of the traditional Minskian literature (section 2). Second, it shows ‘why’ Minsky’s theory cannot be regarded as a general theory of the business cycle (section 3). Third, the paper attempts to supply a simplified, but consistent, re-formulation of Minsky’s theory by inter-breeding it with inputs coming from the ‘New Cambridge’ theories and the current ‘formal Minskian literature’. The aim of this is to analyze the impact of both capital-asset inflation and consumer credit on the financial ‘soundness’ of the non-financial business sector (sections 4-7). Some concluding remarks are provided in the last part of the paper (section 8)
Introduction: The theoretical legacy of Augusto Graziani
No full textAugusto Graziani (1933 2014) was one of the most eminent Italian economists of the twentieth century. He is internationally known as the founding father of the theory of monetary circuit. His contributions to economic theory went beyond the circuit, especially in the early part of his career. They included both other theoretical areas (for example, a critical review of Walras s general equilibrium model) and the analysis of the uneven development of the Italian economy. Even his approach to circuitism was quite original and cannot be reduced to a special branch of post-Keynesianism. This introduction to the symposium on The Economics of Augusto Graziani highlights some key points of his heretical thinking, and gives a quick summary of the papers that follow
Concorrenza senza equilibrio. La "Scoperta Imprenditoriale" nella Teoria Economica Austriaca
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