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Macroeconomics, endogenous money and the contemporary financial crisis: a teaching model

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  • Giuseppe Fontana
  • Mark Setterfield

Abstract

This paper develops an undergraduate macroeconomics teaching model that features endogenous money and an explicit account of commercial bank behaviour. It therefore transcends common shortcomings of existing teaching models based on either IS-LM or its successor, the New Consensus. The model is used to explain the recent financial crisis and its macroeconomic impact, and to analyse the effects and potential shortcomings of monetary and fiscal policy responses to the crisis.

Suggested Citation

  • Giuseppe Fontana & Mark Setterfield, 2009. "Macroeconomics, endogenous money and the contemporary financial crisis: a teaching model," International Journal of Pluralism and Economics Education, Inderscience Enterprises Ltd, vol. 1(1/2), pages 130-147.
    • Handle: RePEc:ids:ijplur:v:1:y:2009:i:1/2:p:130-147
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    Citations

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    Cited by:

    1. Eduardo Drumond & Gabriel Porcile, 2010. "Um Modelo Dinâmico de Macroeconomia Aberta com Metas de Inflação, “Conflito Distributivo” e Equilíbrio na Conta Corrente," Working Papers 0109, Universidade Federal do Paraná, Department of Economics.
    2. Carlos J. Asarta & Frank G. Mixon Jr., 2019. "Publishing and Scholarship in Economic Education: A Catalog and Assessment," The American Economist, Sage Publications, vol. 64(2), pages 269-281, October.
    3. Alberto Botta, 2011. "Fiscal Policy, Eurobonds and Economic Recovery: Some Heterodox Policy Recipes against Financial Instability and Sovereign Debt Crisis," Economics and Quantitative Methods qf1114, Department of Economics, University of Insubria.
    4. Bibi, Samuele & Canelli, Rosa, 2023. "The interpretation of CBDC within an endogenous money framework," Research in International Business and Finance, Elsevier, vol. 65(C).
    5. Giuseppe Fontana & Andrea Pacella & Riccardo Realfonzo, 2017. "Does fiscal policy affect the monetary transmission mechanism? A monetary theory of production (MTP) response to the new consensus macroeconomics (NCM) perspective," Metroeconomica, Wiley Blackwell, vol. 68(2), pages 378-395, May.
    6. Levrero, Enrico Sergio & Deleidi, Matteo, 2017. "The money creation process: A theoretical and empirical analysis for the US," MPRA Paper 81970, University Library of Munich, Germany.
    7. Nadia Oliva & Andrea Pacella, 2016. "The Ethics Inside the Monetary Circuit: How Bank’s Social Responsibility Affects Money Creation," International Journal of Business and Management, Canadian Center of Science and Education, vol. 11(7), pages 1-1, June.
    8. Tallgauer, Maximilian & Schank, Christoph, 2024. "Challenging the growth-prosperity Nexus: Redefining undergraduate economics education for the Anthropocene," Ecological Economics, Elsevier, vol. 216(C).

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