Modern Monetary Macroeconomics

Modern Monetary Macroeconomics

A New Paradigm for Economic Policy

New Directions in Modern Economics series

Edited by Claude Gnos and Sergio Rossi

This timely book uses cutting-edge research to analyse the fundamental causes of economic and financial crises, and illustrates the macroeconomic foundations required for future economic policymaking in order to avoid these crises.


Claude Gnos and Sergio Rossi

Subjects: economics and finance, financial economics and regulation, post-keynesian economics


This volume gathers a series of contributions to monetary macroeconomics within the so-called Dijon–Fribourg School, also known as the theory of money emissions (for a survey, see the relevant chapters in Rochon and Rossi, 2003, as well as Rossi, 2006). Bernard Schmitt, the founder of this School, has developed over about fifty years this new approach to economic analysis and policy making (see for instance Schmitt, 1960, 1966, 1972, 1973, 1975, 1982, 1984, 1988, 1996, 2003). Both in Dijon, where he has founded the Centre for Monetary and Financial Studies at the University of Burgundy, and in Fribourg (Switzerland), Schmitt has taught to various generations of students at different levels of their curricula how contemporary economic systems are essentially monetary economies of production and exchange, within and across country borders. The Schmitt School provides a new conceptual framework for understanding and solving the variety of macroeconomic problems that affect contemporary economic systems at both the domestic and the international level. Starting from an essential definition of money, that is, referring to banks’ double-entry book-keeping, this School explains that the loans-to-deposits causality (as captured by various heterodox approaches to money and banking) derives from the nature of money, but that its working can give rise to a macroeconomic disorder when the structure of banks’ book-keeping does not respect the distinction that exists between money and credit essentially. Banks are, indeed, both money and credit providers, but ‘[t]he supply of credit is the supply of a positive amount of income and requires the existence of a bank deposit (a stock), whereas the supply of money refers to the capacity of banks to convey payments (flows) on behalf of their clients’ (Cencini, 2001, p. 7).