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Towards an ‘accounting view’ on money, banking and the macroeconomy: history, empirics, theory

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  • Dirk J. Bezemer

Abstract

In this paper three views are considered which are traditionally associated with ‘money cranks’ and ‘brave heretics’. The first is that the credit nature of money has macroeconomic significance. The second is that financial development can be bad for economic growth. The third is that macroeconomic models need to be explicitly monetary macroeconomic models. It is argued that in each of these three areas, there has been a recent shift in mainstream economic opinion. This suggests new opportunities for meaningful debate between heterodox and orthodox schools on money and finance. It is further argued, following Skaggs (2003), that a common meeting ground could be an ‘accounting view’ of economics. This is a mode of macroeconomic analysis which explicitly uses accounting definitions, identities (that credit is also debt, or that flows of a variable affect the stock of that variable) or accounting methods (e.g. decomposing different kinds of liabilities, or linking flows of liquidity to flows of transactions) to structure and direct the analysis. The accounting view is highly pluralist yet clearly defined. I discuss its applications to each of the three views.

Suggested Citation

  • Dirk J. Bezemer, 2016. "Towards an ‘accounting view’ on money, banking and the macroeconomy: history, empirics, theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 40(5), pages 1275-1295.
    • Handle: RePEc:oup:cambje:v:40:y:2016:i:5:p:1275-1295.
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    File URL: http://hdl.handle.net/10.1093/cje/bew035
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    Cited by:

    1. Rohwer, Götz & Behr*, Andreas, 2020. "Revenues from Financial Capital. A Formal Framework," MPRA Paper 99306, University Library of Munich, Germany.
    2. Marwil J. Dávila-Fernández, 2019. "Manufacture Content and Financialisation: An Empirical Assessment," Department of Economics University of Siena 811, Department of Economics, University of Siena.
    3. Bossone Biagio & Costa Massimo, 2021. "Money for the Issuer: Liability or Equity?," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 15(1), pages 43-59, January.
    4. J. W. Mason, 2018. "Income Distribution, Household Debt, and Aggregate Demand: A Critical Assessment," Economics Working Paper Archive wp_901, Levy Economics Institute.
    5. Braun, Benjamin & Deeg, Richard, 2019. "Strong firms, weak banks: The financial consequences of Germany's export-led growth model," MPIfG Discussion Paper 19/5, Max Planck Institute for the Study of Societies.
    6. Li, Boyao, 2022. "The macroeconomic effects of Basel III regulations with endogenous credit and money creation," MPRA Paper 113873, University Library of Munich, Germany.

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