Money Creation, Employment and Economic Stability: The Monetary Theory of Unemployment and Inflation

Authors

  • Alain Parguez University of Besançon, France

DOI:

https://doi.org/10.2298/PAN0801039P

Keywords:

Money, Banks, Employement, Fiscal policy, Philips curve, Inflation, Exchahnge rates, Deficit, COnsumption, Investment

Abstract

This paper by building on the general theory of the monetary circuit, proves that money-as a pure bank credit liability-exists to overcome constraints on required expenditures by firms, household and mainly the State. From this perspective the paper derives the employment function in the modern monetary economy. Thereby it is explained that full employment policy is both always possible and required. It is proven that this conclusion holds in a perfectly open economy. Ultimately it is explained that there is no trade-off between full employment and sustainable price stability.

Key words: Money, Banks, Employment, Fiscal policy, Phillips curve, Inflation, Exchange rates, Deficit, Consumption, Investment.
JEL: E24, E31, E62.

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Published

2008-10-10

How to Cite

Parguez, A. (2008). Money Creation, Employment and Economic Stability: The Monetary Theory of Unemployment and Inflation. Panoeconomicus, 55(1), 39–67. https://doi.org/10.2298/PAN0801039P

Issue

Vol. 55 No. 1 (2008)

Section

Original scientific paper