2013
DOI: 10.1007/s10663-013-9239-6
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A simple model of income, aggregate demand and the process of credit creation by private banks

Abstract: This paper presents a small macroeconomic model describing the main mechanisms of the process of credit creation by the private banking system. The model is composed of a core unit-where the dynamics of income, credit, and aggregate demand are determined-and a set of sectoral accounts that ensure its stock-flow consistency. In order to grasp the role of credit and banks in the functioning of the economic system, we make an explicit distinction between planned and realized variables, thanks to which, while main… Show more

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Cited by 11 publications
(7 citation statements)
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“…Banks' ability to expand the existing money supply has critical consequences on the functioning of 203 economic systems and the availability of bank credit often represents the single most important 204 precondition for achieving growth (Bernardo and Campiglio, 2014;Schularick and Taylor, 2012). 205…”
Section: Access To Finance and Credit Creation 159mentioning
confidence: 99%
“…Banks' ability to expand the existing money supply has critical consequences on the functioning of 203 economic systems and the availability of bank credit often represents the single most important 204 precondition for achieving growth (Bernardo and Campiglio, 2014;Schularick and Taylor, 2012). 205…”
Section: Access To Finance and Credit Creation 159mentioning
confidence: 99%
“…In my opinion, Bernardo and Campiglio (2013) provide a good assessment of the controversy over national accounting that Keen got started. They point out that equation (1a) is counter-intuitive because it is inconsistent with national accounting, which deals with ex post definitions where aggregate expenditure is equal to aggregate income by definition.…”
Section: Minskymentioning
confidence: 99%
“…For Bernardo and Campiglio (2013) planned consumption at time t depends on income at time t. However realized consumption expenditure at time t + 1 is equal to planned consumption expenditure at time t; in other words, realized consumption at time t + 1 depends on income at time t. Similarly, realized investment at time t + 1 is in part financed by realized retained earnings at time t. Because ex post investment is by necessity equal to ex post saving, in the case where households spend all their disposable income, it is obvious that a rising level of investment, and hence a rising level of aggregate demand, has to be financed by an increase in bank lending, so that equation (1b) applies. This is also what Minsky (1975, p. 135) had in mind when 2.…”
Section: Minskymentioning
confidence: 99%
“…Fontana and Sawyer (2016), Jackson and Victor Naqvi (2015) analyzed the importance of the policies for financial markets with the environmental sustainability. Bernardo and Campiglio (2014), Daly (2013Daly ( , 2014, Douthwaite (2012), Seyfang and Longhurst (2013), had been studying the financial system for the sustainable economic growth .…”
Section: Introductionmentioning
confidence: 99%