There is a consensus among the majority of economists that the credit supply is limited by current household saving. If governments or foreigners ran deficits, they would absorb this limited saving so that firms could not borrow any longer and had to reduce their investment. This is the...

There is a consensus among the majority of economists that the credit supply is limited by current household saving. If governments or foreigners ran deficits, they would absorb this limited saving so that firms could not borrow any longer and had to reduce their investment. This is the...

When the government issues its own nonconvertible currency--also known as a flexible exchange rate policy--the central bank, as monopoly supplier of net reserves to its member banks, is the (exogenous) source of the risk-free yield curve. Furthermore, in the case of government member bank...