Advances in Endogenous Money Analysis
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Advances in Endogenous Money Analysis

Edited by Louis-Philippe Rochon and Sergio Rossi

The endogenous nature of money is a fact that has been recognized rather late in monetary economics. Today, it is explained most comprehensively by the theory of money in post-Keynesian monetary theory. The expert contributors to this enlightening book revisit long-standing debates on the endogeneity of money from the position of both horizontalists and structuralists, and prescribe new areas of research and debate for post-Keynesian scholars to explore.
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Chapter 17: Horizontalism and structuralism: a suggested reinterpretation

Louis-Philippe Rochon and Sergio Rossi

Abstract

This chapter sheds light on the endogenous nature of money. Contrary to the established post-Keynesian, or evolutionary, view, the chapter argues that money has always been endogenous, irrespective of the historical period. Instead of the evolutionary theory of money and banking that can be traced back to Victoria Chick’s 1986 paper, this chapter puts forward a revolutionary definition of endogenous money consistent with many aspects of post-Keynesian economics as well as with the monetary circuit approach. This alternative starting point leads to the conclusion that money is indeed ‘always and everywhere’ an endogenous phenomenon. This analysis rests on the nature of debt, the essential role of a settlement institution, and the link between production, money and income.

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