Circulation Approach and Applied Economics: Monetary Duality in Cuba
This chapter is an exercise in applied economics, concentrating on circular flows. It is trivial to mention that the monetary theory of production is centrally concerned with the analysis of circular flows in a market economy. By contrast with the mainstream approach, which understands such an economy exclusively in terms of real supply and demand, the circulation approach focuses on the monetary flows generated by economic activity. My contention is that circular flows are not simply one of the various aspects which characterise this approach, together with, for example, endogenous money, the bank rate of interest or producers sovereignty. It is the core of the monetary theory of production, and an author may happen to be closer to this theory even if he deals only with real magnitudes, than another author who deals with monetary magnitudes, but from an allocation standpoint. To put it in a provocative way: Sraffa might be closer to Graziani than Kaldor.
KeywordsExchange Rate Central Bank Circular Flow Monetary Theory Private Resource
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