ABSTRACT As part of the literature that emphasizes alternative narratives as a prominent means of promoting change in the face of the climate crisis and other ecological catastrophes, we concentrate on local self‐sufficiency, which has been identified as one of the promising paths to sustainability. Inductive content analysis of public discussion of radical self‐sufficiency on a Finnish newspaper website, using two sets of data 10 years apart, uncovered shared features in people's evaluation and reasoning on self‐sufficiency. From the discussion, a social imaginary of a desirable “normal” state, characterized in terms of the monetary economy and technological progress, is readily identifiable. In contrast, change toward a self‐sufficient lifestyle is seen as contingent on several factors: it being universalizable, contributing to common goals, and discouraging living off other people. These findings suggest that efforts to articulate narratives of low natural resource use must pay heed to broadening the social imagination, while simultaneously highlighting opportunities to participate meaningfully in society.

W. H. Hutt on Keynesianism and the microfoundations of monetary theory

Aims: This study aims to reconceptualize de-dollarization by moving beyond aggregate currency shares and examining the distinct monetary functions performed by the US dollar, in order to clarify the structural limits and risks associated with substitution away from the dollar. Study Design: This is a theoretical and analytical study grounded in international monetary economics, macro-financial stability theory, and international political economy. Methodology: The paper develops a formal analytical framework that decomposes international currency use into four functionally distinct roles: unit of account, medium of exchange, store of value, and financial anchoring. De-dollarization is modeled as functional bypass rather than generalized substitution, with feasibility constrained by balance-sheet risk, safe-asset scarcity, settlement efficiency, and sudden-stop dynamics. A Functional De-Dollarization Index (FDI) is introduced to summarize effective monetary sovereignty net of macro-financial stability costs. Results: The analysis shows that substitution away from the US dollar is relatively feasible in pricing and payment functions but sharply constrained in store-of-value and financial-anchoring roles, particularly in financially shallow economies. Premature bypass in safety- and finance-critical functions generates nonlinear instability through currency mismatch, financing contractions, and settlement fragmentation. As a result, partial dollarization emerges as a second-best equilibrium that stabilizes output and capital flows under global risk shocks. Conclusion: This paper reconceptualizes de-dollarization not as hegemonic decline, but as a function-specific reallocation of monetary roles shaped by infrastructure scarcity and constrained by macro-financial risk. International monetary power arises not from currency share dominance per se, but from the ability to provide stability-critical monetary infrastructure under stress. At present, the currency that can comprehensively fulfill this role is, in practice, limited to the US dollar.

The Meese–Rogoff puzzle suggests that exchange rate models rarely outperform a random walk in out-of-sample forecasting. This paper re-examines that puzzle in the context of the German hyperinflation, an environment in which monetary forces dominate economic behavior. Using simple bivariate specifications derived from the quantity theory of money, purchasing power parity, and the monetary model of exchange rates, the paper evaluates forecasting performance against a random walk benchmark. The results show that during the most intense phase of hyperinflation, these fundamentals-based models can outperform the random walk in terms of root mean square error. This finding indicates that exchange rate predictability is regime-dependent and that, under extreme monetary instability, basic theoretical relationships can regain forecasting power.

Mises (1953, 1990, 1998) put the theory of money on a sound basis by integrating it with marginal utility theory and clearly explaining its value in these terms. One of Mises’s important conclusions is that demand for money is always demand to hold—that is, money’s value comes from being held (Hutt 1956; Hoppe 2012), not from being exchanged. What Mises termed secondary media of exchange (Mises 1998, 459) are partial substitutes for money. A person holds various claims and commodities to economize on the need to hold money, their high degree of secondary marketability making them suitable for this purpose. Salerno (2010a), building on Rothbard’s (2009) extension of Misesian monetary theory, presents a simple model distinguishing between the exchange demand for money and the reservation demand for money. We aim, first, to clarify some points in this model to in turn clarify our claim that demand for money is always demand to hold. Second, expanding on Žukauskas and Hülsmann (2019), who apply the Rothbard–Salerno model to the demand for financial assets and its relationship to the demand for money, we try to extend that model to incorporate close substitutes for money—what Mises calls secondary media of exchange. The model allows us to better understand what has been called the quality of money (Bagus 2009, 2015; Bagus and Howden 2016; Žukauskas 2021)—the idea that high-quality money will have a higher reservation demand, while lower quality money will have a lower reservation demand. Similarly, the higher the quality of money, the lower the demand for secondary media of exchange, and vice versa. In this way, we can consider the existence and importance of secondary media of exchange to be a proxy for the quality of money.

Abstract In this article we present the monetary theory, known as the ‘Theory of the Emission Economy’, most fully formulated over a century ago by the Russian economist S. A. Falkner (1890–1938). It is strikingly reminiscent of Modern Monetary Theory. The Theory of the Emission Economy was put into practice soon after the October 1917 Bolshevik Revolution and ended in an inflationary catastrophe. Lenin himself, who at first shared its basic ideas, was eventually forced to support a monetary stabilisation based on the introduction of gold coins, the chervonets, that was completed in early 1924, and which ultimately resolved the monetary crisis along conventional monetary lines. This disastrous Bolshevik monetary experiment stands as a clear warning to modern MMT advocates who seek to implement it in a contemporary setting.

Semester-long central banking project in monetary theory and policy course

Abstract As the popularity of crypto-assets grows, so does the interest of scholars in exploring different features of these so-called decentralised forms of private digital money. This essay dives into the seminal question of whether the inner characteristics of the so-called cryptocurrencies—understood as privately issued, decentralised and technologically based assets—allow for their natural evolution into money. Prior debates on electronic money are revisited to question whether new technological developments, such as decentralised ledgers, will successfully elevate cryptocurrencies to money. This paper argues that this scenario should be disregarded, not only due to the practical shortcomings of cryptocurrencies, but mainly because the foundations of such fully mechanised currencies are irreconcilable with an ontology of money as a claim, denominated in money of account, as proposed by credit theories of money.

Extremes of the Edgeworth box concern corner allocations and their relationship to the contract curve in a two-good, two-agent exchange economy. In the standard pure-exchange setting with well-behaved preferences, the contract curve comprises all Pareto-efficient allocations, including interior tangencies and boundary corners, where no mutually beneficial trade remains. When money is introduced as a numéraire (a medium of exchange only), real feasibility and preferences are unchanged, so the contract curve remains the benchmark for efficiency. When money provides liquidity services (is valued for holding), agents may rationally abstain from trade even near interior tangencies; short-run outcomes can therefore include inaction at corners. This entry defines these objects, outlines the efficiency conditions at boundaries, and summarizes how monetary interpretations affect short-run behavior in general equilibrium and monetary economics. The Edgeworth geometry remains a real-exchange depiction; when we discuss money as a store of value, we use it as a short-run, reduced-form outside option that proxies intertemporal motives. This does not “fix” the box; it clarifies why no-trade at or near corners can be individually rational when liquidity is valued.

This study aims to examine the key macroeconomic determinants of Tunisia’s trade balance over the period 1990 to 2021 by analyzing the dynamic interactions among broad money supply (M2), real effective exchange rate (EX), and real gross domestic product (GDP). The study employs the Autoregressive Distributed Lag (ARDL) Bounds Testing approach to assess both short-run and long-run relationships. The analysis is grounded in elasticity, absorption, and monetary theories, using annual time series data. Diagnostic tests for stationarity, residual behavior (including autocorrelation, normality, and heteroskedasticity), and model stability through the CUSUM test are also conducted to validate the model. The results indicate that GDP and M2 have significant effects on the trade balance in both the short and long run. An increase in M2 contributes to a worsening trade balance due to increased domestic consumption and import demand, while GDP growth enhances export performance and improves trade balance outcomes. The real effective exchange rate exerts a significant positive long-run impact, supporting the view that currency depreciation strengthens export competitiveness. The findings suggest that policymakers should adopt cautious monetary expansion, maintain a flexible and strategic exchange rate policy, promote export-led industrial development, and support investment-driven GDP growth to reduce persistent trade imbalances and enhance long-term external sector sustainability in Tunisia.

ABSTRACT This paper examines how Central Bank Digital Currencies (CBDCs) interact with post-Keynesian theories of endogenous money, focusing on two main issuance scenarios: conversion from existing bank deposits and discretionary issuance by the central bank. By mobilising the debate between horizontalists, structuralists and institutionalists, our analysis shows that issuing CBDCs against deposits is fully compatible with endogenous money theory. Discretionary issuance, where money would be created without prior demand for it and with no relation to banks’ financing operations, raises critical questions and challenges traditional post-Keynesian views, as it introduces an exogenous component into the money supply. However, drawing on recent theoretical advances, particularly the distinction between instrument-level and system-level endogeneity, we argue that CBDCs may transform monetary regimes without necessarily undermining the endogeneity of money at the system level. Although CBDCs do not inherently undermine the endogeneity of money, their macroeconomic impact and political acceptability depend on their design and the broader institutional context. In particular, discretionary issuance opens new possibilities for monetary policy, akin to a digital form of helicopter money, but raises important concerns regarding central bank independence, financial stability, and democratic legitimacy.

The relevance of the study was determined by the following circumstances: the crisis of confidence in the international monetary and financial system (IMFS), the search for alternative reserve assets, and the growing demand for gold as a protective asset that is not an obligation. The subject of the research is the remonetization of gold in a digital environment. The purpose is to identify the possibility of combining the processes of gold remonetization and digitalization of IMFS. The methods of theoretical, logical, contextual, retrospective and system analysis were used in the course of the work. The problem of gold remonetization is considered by the author within the framework of traditional monetary theory in the context of the main functions of money and is interpreted as a process of strengthening the systemic role and importance of gold due to the loss of confidence in the US dollar, while the main function of gold is to preserve the value of reserves and savings, as well as the purchasing power of means of payment in the context of an uncontrolled increase in global money supply. It has been established that in the context of geopolitical and sanctions risks, gold is becoming a sought-after reserve asset and is potentially capable of ensuring the process of remonetization. As a result of the research, the author came to the following conclusions: the possibilities of tokenization technology make it possible to implement gold in the digital IMFS, removing a number of limitations typical for monetary gold. The issuance of goldbacked digital instruments by government agencies, international organizations, or supranational structures will help transfer their circulation from private to the official level of the IMFS. At the same time, the global remonetization of gold in the digital economy is unlikely, whereas the creation of an international digital currency backed by gold by a group of interested countries with payment and reserve functions has a high chance of implementation.

What if the core assumption behind decades of macroeconomic modeling, treating GDP as a difference-stationary series was mathematically and empirically wrong? This article delivers a radical, data-backed challenge to one of the most entrenched beliefs in applied econometrics. We prove that long-run behavior of GDP, along with its core monetary counterparts and related macroeconomic aggregates, is governed by nonlinear dynamics bounded by structural ceilings, rather than by an unbounded linear trend. These nonlinear forces persist even under sustained monetary expansion and exogenous shocks, revealing a self-constraining architecture that challenges conventional difference-stationary assumptions. We demonstrate, both econometrically and mathematically, that GDP converges toward a definable limit inherent to the economic environment. We reconstruct the classical equation of exchange under nonlinear interdependence. The theory is applied to nominal and real time series of European countries as well as for the US. In a field where most models assume “more money equals more growth,” our findings, backed by rigorous time series analysis of 49 macro-economic time series from 37 different countries, including unit root tests, and nonlinear estimation reveal a ceiling exists. The findings are striking: GDP does not drift endlessly, but converges. Moreover, our results show that velocity, money supply, price level, and output exhibit interdependence as elements of the same nonlinear mathematical family. This systemic behavior challenges the dominant DS modeling paradigm and reshapes how macro-financial trajectories should be forecasted and understood. By identifying measurable upper bounds in GDP evolution and proposing a new analytical framework, this discovery introduces a decisive shift in the modeling of macroeconomic aggregates. The implications extend to monetary theory, inflation expectations, and the understanding of structural shocks in long-term forecasting. If you've ever questioned the long-run validity of DS models or struggled with unexplained forecasting errors in macro models, this article offers the missing link.

The author analyzes in detail the Modern Monetary Theory (MMT) view of inflation and the criticisms it has received, and confronts these analyses with the recent evidence of post-pandemic inflation. The author concludes that most of the criticism that MMT receives is poor and unfounded and that, although MMTers tend to focus only on demand-side inflation, they actually have a fairly adequate view of inflation, which has allowed them to understand reasonably well the causes of post-pandemic inflations.

We can say that in the context of Financial Computing, the present article aims to delve into an exploration of the intricate web of relationships among the key economic variables, with a central focus on the concept of money, mapping and connecting different theories through a new definition of velocity of money. In practice, the novelties of the article are based on the following aspects: i) definition of a new concept of velocity of circulation of money based on utility; ii) consequent redefinition of the demand for money; iii) fil rouge found to connect the various theories based on the above: a) quantity theory of money by Friedman, b) Keynesian theory on Money, c) neoclassical theory on consumers choices, d) mean variance theory by Markowitz, Arrow Pratt approximation, e) Purchasing Power Parity, f) prospect theory by Tversky and Kahneman. The article attempts to identify a common thread among various models related to the concept of money. The concept of money anyway is intended in a broader sense than usual, including the financial instruments that can be used as a financial reserve of value easily convertible in cash. In practice we intend for money financial wealth. When we write in the article the word money we will intend it in this broader sense. The objective is not to create a comprehensive theory of money in the economic and financial fields, but, starting from this broader concept of money, to identify possible connections between theories that have so far been treated separately. The new concept of the velocity of money circulation, which depends on the ratio between the utility of purchasable goods and services, and the utility of money, helps in establishing some of these connections. In the article, when ‘goods’ are mentioned, it refers to ‘goods and services.’

The two prominent heterodox schools of economics are the Austrian and post-Keynesian schools. For this reason, they are sometimes analyzed together. This article continues this tradition, focusing on monetary economics. Both schools share certain features, especially an emphasis on the non-neutrality of money. The aim of this article is to compare Austrian and post-Keynesian monetary economics to determine whether both schools would benefit from an intensified intellectual exchange. The author shows that although the non-neutrality of money plays a crucial role for both schools, they have interpreted this concept differently. The differences between the Austrians and the post-Keynesians are significant, but there is some potential to learn from each other. The author argues that the Austrian school could reject the money multiplier model and look more favorably on the idea of endogenous money, while the post-Keynesians could enrich Minsky’s financial-instability hypothesis with the insights of the Austrian business cycle theory.

After many months of pandemic-related restrictions and economic disruption, inflation in the Euro Area began to rise sharply in 2021. The European Central Bank (ECB) initially characterized this increase as temporary and attributed it mainly to supply-side shocks, such as energy price increases and supply-chain bottlenecks. This study revisits that narrative by examining whether monetary developments had already signaled more persistent risks. Using the framework of the Quantity Theory of Money, we analyze the divergence between broad money (M3) and real GDP growth and construct an indicator of Hidden Monetary Imbalances (HMI) that captures the portion of liquidity growth not yet absorbed by output or prices. In response to the Great Financial Crisis and the COVID-19 pandemic, the ECB implemented highly accommodative policies, resulting in an unprecedented surge in liquidity. Our descriptive evidence shows that, since 2015, the growth of the money supply has systematically outpaced the expansion of the real economy. As money velocity normalized, this excess liquidity contributed to inflationary pressures. Our results suggest that by 2020, excess liquidity would already imply a cumulative price-level adjustment of more than 30% if output and velocity remained unchanged. Inflation subsequently accelerated, with the HICP rising above 5% in early 2022 and peaking at 10.6% in October 2022, before remaining above the ECB's 2% target until late 2024. The findings highlight the limitations of relying solely on inflation targeting without monitoring monetary aggregates. Reintroducing systematic monetary cross-checks, including the tracking of broad money and diagnostics such as HMI, could improve the ECB's ability to anticipate inflationary risks.

Abstract Introduction. The article analyzes investment in the context of the evolution of monetary systems and the transformation of the financial architecture of the modern economy. Unlike classical and neoclassical approaches, which treat the monetary system as an institutionally neutral environment, this study proceeds from the assumption that the structure of money, emission mechanisms, and interest-debt logic have a systemic impact on investment behavior and the distribution of capital between the real and financial sectors. The relevance of the work is determined by the growth of financialization, the digitization of financial infrastructure, and the spread of sustainable investment practices.Methodology. The study is theoretical and analytical in nature and is based on institutional and comparative approaches. Methods of conceptual analysis, historical and economic comparison, and typology are used. The theoretical basis is provided by classical and modern investment theories, institutional economics, and critical monetary theory, as well as a review of recent scientific publications and materials from international financial organizations.Main material. It is shown that the dominance of the interest-debt monetary system leads to an institutional shortening of the investment horizon and a shift in capital flows towards short-term and highly liquid projects. Alternative interpretations of the role of money and interest are considered, including approaches that treat money as a social and institutional agreement. Particular attention is paid to Bernard Lietaer's concept, in which monetary architecture is an active factor in the formation of investment incentives. Using the example of government bonds, infrastructure investments, complementary currencies, and sustainable financial instruments, the dual role of financial institutions in stimulating growth and reproducing systemic risks is demonstrated.Prospects and recommendations. It is argued that a new investment equilibrium is possible with the development of complementary monetary and financial circuits, the integration of sustainable finance into regulatory standards, the digitalization of investment infrastructure, and the expansion of investment performance criteria beyond purely financial returns.Conclusions. We conclude that there is a need to revise the classical understanding of investment towards an institutionally expanded framework that takes into account monetary architecture, socio-environmental effects, and the long-term sustainability of investment decisions.

The endogenous money creation paradigm posits that banks generate money through lending, with deposits serving as a byproduct. This study investigates the mechanism driving the “credit–deposit paradox” during Poland’s high-interest-rate environment, introducing innovative methodological approaches to quantify systemic monetary impairment. Using comprehensive monthly data from 2006 to 2024, we employ a mixed-methods framework featuring: (1) Bayesian vector autoregression with Minnesota priors to test dynamic interdependencies; (2) a novel money shortage indicator (MSI) that operationalizes credit–deposit decoupling through three theoretically grounded components; (3) Markov regime-switching analysis to identify persistent monetary stress regimes. Key findings reveal a structural decoupling between deposit growth and credit creation, with robust evidence that exogenous money inflows accumulate as idle deposits rather than stimulating lending. The economy experienced significant periods of money shortage conditions, with the most severe impairment occurring during recent high-stress periods. The analysis confirms the dominance of cost-push inflation from energy and food prices, while monetary factors played a limited role. High interest rates amplified credit demand suppression, creating conditions consistent with endogenous money creation disruption. Methodologically, this study enables three key advances: (1) systematic measurement of monetary transmission breakdowns; (2) empirical identification of structural factors disrupting credit–deposit dynamics; (3) temporal characterization of monetary stress persistence patterns. These contributions advance the endogenous money framework by demonstrating its vulnerability to behavioral, policy-induced, and exogenous disruptions during high-stress periods. Practically, the MSI offers policymakers a real-time diagnostic tool for identifying monetary transmission breakdowns, while the regime analysis informs targeted countercyclical measures. Specific policy recommendations include developing sector-specific liquidity facilities, coordinating fiscal transfers with monetary policy to prevent deposit–loan decoupling, and prioritizing supply-side interventions during cost-push inflation episodes. By integrating post-Keynesian theory with empirical evidence from Poland, this study contributes to understanding money creation mechanisms in highly stressed economic environments.

The goal of this article is to research the monetary economy of Georgia in the long 11th century (975-1122). We focus on the Kingdom of Egrisi, a state created by the Georgian branch of the Bagratid family. By monetary economy, we refer to the study of the monies circulating within the realm in the designated area and epoch, and the extent of monetization of the state and society. Our study material comprises local both written/epigraphic and monetary sources concerning monetary circulation and monetary relations. We endeavoured to base our reasoning on a comparative analysis of the narrative and monetary evidence. Meta-analysis of both monetary evidence and written/epigraphic primary sources leads us to conclude that the economy of the Kingdom of Egrisi in the long 11th century was partially a monetary one. It comprised a substantial monetary component, based on a dual system of circulating gold and silver currencies: (a) Byzantine gold histamena of various emperors of decreasing fineness, and later hyperpyra; (b) Georgian (but not Byzantine!) silver coins, initially possibly Georgian imitations of Kufic dirhams (dramas?), and even original Kufic dirhams, later replaced by silver coins issued by Bagrat IV, Giorgi II, and Davit IV, styled after the 2/3 miliaresia of Constantine IX (bearing the Byzantine-derived designation of azhura). In the extreme eastward province of Kartli, the already degraded Islamic coinage of Tiflis entered the monetary circulation of the Kingdom of Egrisi, though its share was supposedly minimal. Nevertheless, the extent of monetization was rather limited, and mostly applied to the wealthy, - i.e. the church, royal authorities, and nobility. Remarkably, the concept of paying in hard was not entirely unfamiliar even to the population in mountainous peripheries. Prevalence of barter trade over monetary transactions was overwhelming, at least in rural areas (regrettably, no data exist for urban centres). The Dats’erili of the Abbot of [Church of] St. Nik’olaos with its tens of transactions recorded reflects a partially barter economy. Monetization of day-to-day petty transactions appears rather limited. Anonymous Byzantine folles of relatively low value have been found in some number, including in hoards, on the historical territory of the Kingdom of Egrisi. These could be interpreted as an evidence of the petty trade, save for the suspicion that many (if not all) were imported into this area much later, already in the 12th and 13th centuries.