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757. Beyond the traditional monetary circuit: endogenous money, finance and the theory of long-period effective demand

Working paper N. 757 Luglio 2017

Sergio Cesaratto

DEPS, USiena


The paper is a contribution to a long-run theory of effective demand with elements from monetary circuit theory, Modern Monetary Theory and endogenous finance analysis. Some shortcomings of the still influential neo-Kaleckian growth model and monetary circuit theory are underlined, and the Sraffian supermultiplier is indicated as the most promising heterodox approach to growth and instability in capitalism. The Sraffian supermultiplier allows full consideration of the autonomous components of aggregate demand as the ultimate sources of growth and instability in modern capitalism. Following Steindl, capital gains are included among these components. Autonomous demand and investment are typically fed by endogenous finance. The paper articulates the relation between autonomous demand and investment on one hand, and endogenous finance on the other, in the light of Keynes’s distinction between initial and final finance.


Supermultiplier, endogenous money, monetary circuit theory, modern monetary theory, autonomous demand

Jel codes

B51, E11, E12, E42, E5