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Contemporary Post Keynesian Analysis

Edited by L. Randall Wray and Mathew Forstater

Original articles by leading scholars of post Keynesian economics make up this authoritative collection. Current topics of the greatest interest are covered, such as: perspectives on current economic policy; post Keynesian approaches to monetary theory and policy; economic development, growth and inflation; Kaleckian perspectives on distribution; economic methodology; and history of heterodox economic theory. The contributors explore a variety of prevailing issues including: wage bargaining and monetary policy in the EMU; the meaning of money in the internet age; stability conditions for small open economies; and economic policies of sustainable development in countries transitioning to a market economy. Other enduring matters are examined through the lens of economic theorists – Kaleckian dynamics and evolutionary life cycles; a comparison between Keynes’s and Hayek’s economic theories; and an analysis of the power of the firm based on the work of Joan Robinson, to name a few.
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Chapter 4: Money in the Time of the Internet: Electronic Money and its Effects

Claudio Sardoni


Claudio Sardoni* 1 INTRODUCTION In the last few years, much attention has been paid to the effects that the socalled information technology (IT) revolution can have on the monetary and financial system of advanced economies. This chapter considers the impact that these technological changes can have on central banks and their ability to implement an effective monetary policy, a topic recently discussed by many monetary economists. In this context, particular attention is paid to the role and effects of electronic money (e-money). Some believe that recent technological developments can reduce significantly the importance of central banks and their ability to implement monetary policy. Others have responded by holding that IT advances do not imply radical changes of the existing monetary organization in advanced economies. In this debate, e-money is often regarded as an exemplification of what the IT revolution can bring about. After having defined precisely what is meant by e-money and having considered some basic characteristics of this new means of payment (section 2), I turn to consider the current debate on IT and the future of central banking (section 3). In the concluding section 4, I argue that, although in principle IT advances could imply a significant weakening of the central banks’ power, this requires that e-money evolves into a means of payment different from the current one. In particular, I argue that in order to arrive at a world in which central banks have, mostly or entirely, lost their power, it is necessary...

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