A simple macroeconomic model of a currency union with endogenous money and saving-investment imbalances Online publication date: Wed, 31-Dec-2014
by Dirk H. Ehnts
International Journal of Pluralism and Economics Education (IJPEE), Vol. 5, No. 3, 2014
Abstract: The great financial crisis has triggered new economic thinking about the functioning of an economy, and in the European case, of a currency union. Explanations of the macroeconomic relations inside a currency union are therefore in demand. It is now widely understood that sectoral debt and the current account should be part of a model. Traditional textbook models, like the IS-LM-BP or the IS-MR-PC models, respectively, are found lacking on the monetary or the real side, or both. This paper develops a model in order to fill this gap by constructing a simple model featuring endogenous money and saving-investment imbalances.
Online publication date: Wed, 31-Dec-2014
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