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Abstract With the purpose of performing a simple and original analysis on the mechanisms through which money and debt affect aggregate demand, this paper presents a stock-flow-consistent model in which… Click to show full abstract
Abstract With the purpose of performing a simple and original analysis on the mechanisms through which money and debt affect aggregate demand, this paper presents a stock-flow-consistent model in which the role of credit creation of banks is emphasized. By conducting theoretical analysis on income determination in an alternative way, we demonstrate that the equilibrium national income can be expressed as flows generated from three sources, namely money circulation, private debt circulation, and total credit expansion.
Journal Title: Finance Research Letters
Year Published: 2020
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