Introduction
Neoclassical macroeconomic theory posits the stock of money in a financial system as an exogenously determined variable. This simplification is the source of much confusion and rivers of ink have been spilt on the meaning for policy of an exogenously determined money stock.
This lecture is about introduced the SFC concept of endogenously created money. We'll start with a simple banking system, and work our way organically up to a plausible description of a monetary economy in the 21st century.
Click below the fold to see handouts, slides, and links to further reading.
Length: 1.5 hours
Handouts
(right click to download)
1. Tables to be used in class
2. Homework Assignment
Slides
Further Reading
Godley & Lavoie, chapter 2
Lavoie, 2000, "A primer on endogenous credit money", in course pack
Godley, 1999, "Money and Credit in a Keynesian Model of Income determination", Cambridge Journal of Economics 23(2), 393-411.