Monetary Theory Research Articles

Search and Matching Approach In Monetary Theory: New Monetarism

Parasal iktisat literatüründeki modeller genellikle paranın değerli olduğunu kabul ederek para miktarını ilgi odağına alan ancak paranın değişim aracı rolü üzerinde durmayan modellerdir. Yeni Parasalcı İktisat yaklaşımının görüşüne göre parasal teori ve politika analizinde gelişme sağlanabilmesi için karşılıksız paranın değişim aracı rolü almasını sağlayan - yani aslen değersiz bir varlık olan karşılıksız paranın değişim işlemlerinde nasıl değişim aracı rolü üstlendiğini gösteren - açık modeller kurulması gerekmektedir. Bunu yapabilmek için dağınık piyasada değişim sürecinin nasıl geliştiğini, oyuncuların faydalarını maksimize etmeleri sürecinde neler olduğunu modelleyebilmek gerekir. Paranın değişim aracı rolünü içselleştirerek modellemek için en uygun araç, değişim sürecindeki miktoremelleri göz önüne alan ve oyun teorik bir yöntem olan arama ve eşleşme yaklaşımıdır (search and matching approach). Bu çalışmada; değişim sürecinin ve özellikle paranın değişim aracı rolünün modellenmesinde kullanılan temel arama ve eşleşme modelleri incelenerek konu ile ilgili bazı ana fikirler aktarılmıştır.

Modern post-Keynesian approaches: continuities and ruptures with monetary circuit theory

Stock-flow-consistent models (SFC) and modern monetary theory (MMT) are growing in popularity. Both are part of post-Keynesian theory and provide it with a modeling tool for the former and political proposals for the latter. However, these new modern post-Keynesian approaches share features with monetary circuit theory: their accounting framework, the hierarchy of agents and economic flows, and the importance of the Keynes’s finance motive. This article examined the fundamental elements of these new approaches to establish their links with monetary circuit theory.

The currency of politics: the political theory of money from Aristotle to Keynes

The currency of politics: the political theory of money from Aristotle to Keynes

Keynes’ denial of conflict: Why The General Theory is a misleading guide to capitalism and stagnation

Keynes’ General Theory was a huge step forward relative to classical economics, but it was also a step backward in its denial of the conflictual nature of capitalism. There is need to understand Keynes’ technical contributions regarding the workings of monetary economies, but also need to understand the flaws within his thinking and the consequences thereof. Keynes made a fundamental contribution elucidating the mechanism of effective demand, and he also has claim to be the preeminent monetary theorist. However, his critique of classical economics was technocratic and focused on the interest rate mechanism. Reflecting his own liberal political economic disposition, he denied the conflictual nature of capitalism. That is the “original sin” in Keynesian economics, and it has far-reaching implications. It explains why establishment Keynesian economics struggles to explain the current tendency to stagnation. Even more importantly, it has kept economics locked into a false conception of capitalism that undermines the case for Social Democracy.

Form of manifestation of value: Heinrich’s monetary theory of value – a review of the Philosophical methodology based on Marx’s labour theory of value

Marx’s scientific labour theory of value is fundamentally inseparable from his philosophical method of advancing from the thinking abstract to the thinking concrete. He employs the power of abstraction to reveal the essential determination of value, and then to accomplish a generalisation of the commonness of all commodity-money relations. Through the intermediate links, Marx advances from the abstract to the concrete, grasping the historical individuality and form of manifestation of value in the specific capitalist phase. Heinrich is acutely aware of the methodological revolution achieved by Marx in his treatment of value theory, and, therefore, advocates examining the value theory from the philosophical methodological perspective. However, in his view, it is the emphasis on the form of value that is Marx’s fundamental critique to the political economy, with money as a necessity in the capitalist society. Consequently, he proposes the term ‘monetary theory of value’ to replace Marx’s labour theory of value. Heinrich, who lacks the scientific power of abstraction, directly focuses on the concrete phase of capitalism and, thus, merely attaches great importance to the external form of manifestation of value. The underlying cause of his deficiency is the philosophical methodology he adheres to, i.e. the formal dialectics.

Modern Monetary Theory in Historical Perspective

We argue that Modern Monetary Theory is an imaginative lens as well as theory. Its emphasis on the advantages of sovereignty in reference to money creation and government spending derives its current political attraction from a variety of collectivist issues pertaining to the environment, health, education and job security. It derives its current economic relevance from two modern historical conditions: (1) the long-term stagnation of investment growth begun in the late 1960s and early 1970s; (2) the combination of automation and globalization that has weakened labor and dampened inflationary pressures in the advanced capitalist world. Discussion of these two issues allows for historical contrast with Abba Lerner’s Functional Finance in which MMT traces part of its’ origins. MMT’s outlook, however, could be much improved by a more robust analysis of the relationship between fiscal means and inequality.

Hess’s Theory of Money, Interaction and Its Influence on the Thought of the Young Marx

Hess’s Theory of Money, Interaction and Its Influence on the Thought of the Young Marx

Transformation of the money market and functions of money in the context of the development of digital technologies: philosophical understanding

The last decade has been characterized by significant changes in the global financial system. First of all, these changes are associated with the ongoing digitalization and digitalization of all industries, including the financial one. In this paper, the authors prove the thesis that the changes introduced by digitalization in many spheres of economic life have penetrated deep theoretical layers, affecting the theory of money and greatly changing them with the help of cryptography. The emergence of cryptocurrencies, stablecoins and other digital assets and innovative processes is forcing us to rethink the concept of money, its nature and meaning. This article is an interdisciplinary study of the theory of money - on the border of philosophy and economics - which is due to the urgent need to modernize that part of economic theory that has been affected by digitalization, financial technologies and the changes they cause. The authors analyzed the change in the ontological status and the results of this change, and also carried out a philosophical understanding of the impact of the transformation of the money market on the social sphere.

Budućnost dolara kao svetske rezervne valute u novim međunarodnim okolnostima

The US dollar is the world's reserve currency, and it is also the currency most often used for trade and other international transactions. Due to the current geopolitical, economic and monetary developments, it is evident that a large number of countries are looking for ways to move away from the dominance of the dollar, as the leading world currency. The risk of de-dollarization has increased recently, partly due to the current Russian-Ukrainian crisis, as well as American economic sanctions against certain countries, and partly due to the growing role of the BRICS countries in the world economy. This paper argues and proves the hypothesis that the dollar as the world's reserve currency and the international monetary system are two sides of the same coin, that a complete loss of confidence in the dollar leads to the collapse of the global monetary system and vice versa, as well as that the destruction of the monetary system would lead to the disappearance of the dollar. The paper elaborates on dollar as a reserve world currency, theories of money, the dollar as a debt, deficits and monetary equivalents, the dollar and free markets, the IMF as a world bank and the SDR as a world money, the demand for gold as an indicator of distrust in the dollar, new global players and the world reserve currency, BRICS expansion and de-dollarization, and it is finalised with concluding remarks.

A relação entre o debate sobre o sistema monetário durante o Jin Oriental e as dinastias do sul e a região econômica de Zhejiang Leste

Abstract: Not only the indigenous aristocratic families but also northern immigrant families living in east Zhejiang were involved in the debates on monetary theory and policy thought in the Eastern Jin and Southern Dynasties. The debates were often focused on the commodity prices and forced labor in east Zhejiang. This special historical phenomenon reflects two questions. On the one hand, the chaos caused by the war in the north and scholar families migrating southward greatly promoted the development of southern China, which made the five counties in east Zhejiang the most important and active areas of economy. On the other hand, it reflects the relationship changes between immigrants and indigenous gentries. Namely, the indigenous aristocratic families and northern immigrant families cooperated in economy so as to enhance the prosperity and development of the east Zhejiang region. Later, with the rise of “common people (寒人)”, the scholars’ economic status was increasingly impacted, which resulted in the gentries’ anxiety and crisis consciousness.

Cryptocurrency in lower-middle-income countries: a monetary theory and regulation perspective

Cryptocurrency in lower-middle-income countries: a monetary theory and regulation perspective

A Monetary Theory on Sectoral Growth and Inequality

A Monetary Theory on Sectoral Growth and Inequality

Analysis of the Relationship between Money Growth and Inflation Using Wavelet Coherency

Different theories of money lead to different conclusions about whether there is a stable long-run relationship between money growth and inflation. In this analysis, the author examines the wavelet coherency between the growth in the M2 monetary aggregate and inflation in Hungary. Based on the findings, there is no robust long-run relationship between the two variables. When filtering out movements in the HUF exchange rate, the coherency between money growth and inflation is eliminated even over the period from the mid-2000s to the early 2010s. This also empirically supports the assumption that monetary policy does not affect inflation by shaping the money supply.

Analysis of the Imperial Rent of Reserve Currency

This article provides an analysis of the economic cost incurred by the world through the use of the fiat international reserve currency since the end of the 1971 gold standard system. The article uses the Quantity Theory of Money to provide an empirical manifestation of how reserve currency yields income to its issuing country through the provision of an inflation buffer, which is equivalent to what the article frames as an imperial rent of reserve currency. The article then provides a method to estimate the cumulative quantity of this rent by using data on the broad money supply, nominal GDP, and world total official foreign exchange holdings of the currency of the country in question. The article estimates that the quantity of the imperial rent of reserve currency that accrued to the four major reserve currency-issuing states (US, Euro area, UK, Japan) from the end of the gold standard until the end of 2021, which was accumulated through the official channel only, is of a value equivalent to 11.1 trillion USD, 71 % of this amount went to the US singly.

Sticky Prices and Costly Credit

We develop a theory of money and credit as competing payment instruments, then put it to work in applications. Agents use cash and credit because the former (latter) is subject to the inflation tax (transaction costs). Frictions that make the choice of payment method interesting also imply equilibrium price dispersion. We derive closed- form solutions for money demand, and show how to simultaneously account for the price-change facts, cash-credit shares in micro data, and money-interest correlations in macro data. The effects of inflation on welfare, price dispersion and markups are discussed, as are nonstationary equilibria with dynamics in the price distribution.

EXCHANGE RATE FORECASTING: THE FUNDAMENTAL FORECASTING MODEL

This paper is using the fundamental forecasting model, which is a monetarist theory of exchange rate determination, for the current forecasting. This theory is tested empirically by using data, spot and forward rates and a variety of macro-variables from seven different countries with respect the U.S., as our domestic country. A GARCH-M model is used to forecast the volatility of the spot exchange rate. The paper is also using a Vector Auto-regression (VAR) framework to forecast simultaneously spot (s_t) and forward (f_t) exchange rates by utilizing exogenous macro-variables, time trends, and policy instruments. Further, at the end an impulse response function and a Hodrick-Prescott filter are used to present visually the behavior of the spot exchange rate. The countries used in the empirical work are, U.S. with respect the Euro-zone, Mexico, Canada, U.K., Switzerland, Japan, and Australia. The results show that these methods are giving very good forecasting for these seven exchange rates by minimizing the standard error of the regression (SER) and the root mean squared error (RMSE). Of course, uncertainty exists always in the forecasting of any economic variables, due to unanticipated public policies (monetary, fiscal, and trade) and other “innovations” in our financial markets, plus the new philosophies (i.e., liberalism, lack of ethics, perversions, DEI, AI, wars, BRICS, etc.), official measurements, and value system in our markets, societies, and way of living.

ԴՐԱՄՆԵՐ ԱՐՑԱԽԻ ՏԻԳՐԱՆԱԿԵՐՏԻ ՊԵՂՈՒՄՆԵՐԻՑ (ՀԱՅ.) / COINS FROM EXCAVATIONS IN TIGRANAKERT OF ARTSAKH

Among the quite rich and diverse finds of Ancient, Medieval and Modern periods material culture obtained as a result of the archaeological excavations of Tigranakert (in Artsakh), there are also silver and copper coins circulated during those stages of the city's existence. They were found in 2008 – 2013, 2016 – 2017, during field works. In two of the six pithos burials and one stone box burial excavated by the expedition, seven Parthian drachmas were found, dating back to 80 – 38 BC. The presence of coins in the tombs of Hellenistic Tigranakert and their relatively large number compared to the number of excavated tombs testify to a city with a developed monetary economy. Coins of the early medieval period are few: they are represented by one Sasanian drachm, one copper imitation of a Sasanian coin, and one Byzantine folis. Coins of the developed Middle Ages, which have been found mainly from the Central Area of the city, are copper fels from the two Eldiguzid atabeks, Shams ad-Din (1136 – 1175) and Abu Bakr (1191 – 1211). Especially the large number of the latter's issues, 12 coins, can be explained by the fact that his main residence was Gandzak/Ganja, not far from Tigranakert. Among the finds of this period is also the silver dirhem of Kay Qobad I (1219 – 1236), Sultan of Rum. Archaeological studies have recorded that the upper chronological limit of finds of medieval material culture in this settlement is the first half of the 13century, which fully corresponds to the fact that there are no coins of the 13– 16centuries here. New times are represented by a silver issue of the Ganja Khanate and three copper issues of the Karabakh Khanate that date back to the 12th – 18th centuries; and also by find during excavations near a water source at the foot of the hill, Russian copper kopecks of the 19th – early 20th centuries.

The Concrete Function of the Banking System: Samir Amin's Monetary Theory of Financial Underdevelopment

The Concrete Function of the Banking System: Samir Amin's Monetary Theory of Financial Underdevelopment

Every Man Has His Price

Immanuel Kant’s moral philosophy is organized around an exclusive disjunction of dignity or price, equality or equivalence. In his 1797 Doctrine of Right, however, Kant places enslaved black people on the wrong side of this disjunction when he speculates that their status as currency may offer insight into the origins of money. Recent work in black studies has begun to speculate on the link between blackness and money in modernity, and this paper draws attention to Kant’s role as an unlikely and unwitting precursor for monetary theories of blackness. Precisely in his attempt to secure the priceless and unconditional character of freedom and dignity, it argues, Kant ends up demonstrating the positional value of both.

Monetarism Theory and Liquidity Decisions of Business Enterprises in Kenya

In order to comprehend how monetary elements and Kenya's financial environment interact, this research investigates the application of monetarism theory to liquidity decisions for enterprises in Kenya. Milton Friedman's monetary theory places a strong emphasis on how the amount of money in circulation affects how the economy performs. Understanding the use of monetarism theory becomes essential in the Kenyan context, as the Central Bank of Kenya plays a key role in enacting monetary policy. The study assesses the effect of monetary policy instruments, including interest rate changes and open market operations, on liquidity decisions and looks at the relationship between changes in the money supply and firm-level liquidity positions. In the context of monetarism theory, it also looks at how macroeconomic variables like inflation rates, currency fluctuations, and economic growth affect firm-level liquidity decisions. This study attempts to add to the body of knowledge on the connection between monetary conditions and firm-level liquidity decisions by applying monetarism theory to the Kenyan setting. The results can help Kenyan policymakers make decisions that are supported by facts and that will promote financial stability, effective liquidity management, and long-term economic growth.