Gu, Mettesini, and Wright (2016) show that when buyers can use both money and credit, money can be essential only if credit is tight, and then further decreases of credit are irrelevant. We find that by additionally allowing indirect credit (i.e., borrowing money from third parties) – they...

The theory of endogenous money is the cornerstone of Post-Keynesian economics, which dates back to the pioneering writings of authors such as J. Robinson, Kaldor and Kalecki. Second generation Post-Keynesians such as Paul Davidson and Basil Moore have clearly drawn the boundaries of...

Since the XIX century, technological progress has allowed commercial banks to create ever greater amounts of broad money and credit starting from a unit of monetary base. Crucially, however, at the very low frequencies the relative amounts of the two aggregates created out of a unit of base...