Given the wide swings in the exchange value of the Canadian dollar over the past decade, some would like to see a return to a fixed exchange rate system in North America. In reviewing the debate between supporters of pegged versus floating rates, there is little analysis found of the...

As creators of credit money, commercial banks prevent the nonfinancial private sector from being constrained by its prior savings in accordance with the theory of the monetary circuit. Commercial banking provides the means for a private economy to break away from its financial constraint....

This paper deploys a simple stock-flow consistent (SFC) model in order to examine various contentions regarding fiscal and monetary policy. It follows from the model that if the fiscal stance is not set in the appropriate fashionâthat is, at a well-defined level and growth rateâthen full...

This paper presents a stock-flow model of two economies (together comprising the whole world) that trade goods and financial assets with one another. The first part of the paper describes a single economy on a fixed exchange rate, with no private capital flows, in order to obtain simple analytic...

This paper develops the cambist (or Post Keynesian) view of forward exchange rates previously put forward in Lavoie (2000), according to which the forward exchange rate is not a predictor of future spot rates. The paper deals with imperfect asset substitutability, the peculiarities of fixed...

It is shown that asset-based financial systems, just like overdraft financial systems, rely on a fully endogenous supply of high-powered money, with central banks engaging essentially in "defensive" operations. This is demonstrated through an analysis of the Canadian monetary process, which is...