Modern Monetary Theory and European Macroeconomics / Edition 1

by Dirk H. Ehnts

Overview

This book provides a new methodological approach to money and macroeconomics. Realizing that the abstract equilibrium models lacked descriptions of fundamental issues of a modern monetary economy, the focus of this book lies on the (stylized) balance sheets of the main actors. Money, after all, is born on the balance sheets of the central bank or commercial bank. While households and firms hold accounts at banks with deposits, banks hold an account at the central bank where deposits are called reserves. The book aims to explain how the two monetary circuits – central bank deposits and bank deposits – are intertwined. It is also shown how government spending injects money into the economy.

Modern Monetary Theory and European Macroeconomics covers both the general case and then the Eurozone specifically. A very simple macroeconomic model follows which explains the major accounting identities of macroeconomics. Using this new methodology, the Eurozone crisis is examined from a fresh perspective. It turns out that not government debt but the stagnation of private sector debt was the major economic problem and that cuts in government spending worsened the economic situation. The concluding chapters discuss what a solution to the current problems of the Eurozone must look like, with scenarios that examine a future with and without a euro.

This book provides a detailed balance sheet view of monetary and fiscal operations, with a focus on the Eurozone economy. Students, policy-makers and financial market actors will learn to assess the institutional processes that underpin a modern monetary economy, in times of boom and in times of bust.

Product Details

ISBN-13:	9781138654778
Publisher:	Taylor & Francis
Publication date:	08/25/2016
Series:	Routledge International Studies in Money and Banking
Pages:	222
Product dimensions:	6.12(w) x 9.19(h) x (d)

About the Author

Dirk H. Ehnts works as a lecturer in Economics at Bard College, Berlin.

Table of Contents

Table of Contents

Introduction

Part I – Theoretical Foundations

Chapter 1. Substance and purposes of economic activity

Part II – Money and Credit

Chapter 2. Debts and balance sheets

Chapter 3. The creation of bank deposits (deposits)

Chapter 4. The creation of central bank deposits

Chapter 5. The instruments of a central bank (monetary policy)

Chapter 6. The creation of sovereign securities (fiscal policy)

Chapter 7. The sustainability of the financial system

Chapter 8. Inflation and deflation

Part III – Analysis

Chapter 9. A macroeconomic model

Chapter 10. Europe before the euro

Chapter 11. The situation with the euro

Part IV – Reform

Chapter 12. How do we restore demand?

Chapter 13. The future – with or without the euro?

Conclusion

Further readings

Index