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The Theory of the Monetary Circuit in a Financialised Economy

Canelli, Rosa (2018) The Theory of the Monetary Circuit in a Financialised Economy. PhD thesis, University of Leeds.

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This thesis presents an investigation of some key features of the financialisation era, drawing on the monetary circuit approach and on the Stock-Flow Consistent modelling. It provides an alternative framework for analysing the increasing role of the shadow banking system and the securitisation procedure, evaluating the effects of these phenomena on the working of the macroeconomic system. Endorsing an economic function (activities)-based approach to the shadow banking system, the thesis extends the theory of the monetary circuit developed by Augusto Graziani, providing a detailed and sophisticated description of the role of modern financial markets. The emphasis is on the functions played by non-bank financial intermediaries and on the consistency with Graziani's method of analysis. The thesis develops a financialised version of the monetary circuit which incorporates the shadow banking system in a functional classification, capturing a phenomenon constantly evolving over time. To explore the effects of the shadow banking system in a financialised monetary circuit, the thesis presents a fully-specified Stock-Flow Consistent model. It focuses on the prominent position gained by the households sector in feeding the securitisation process, and draws attention to the role of household debt in modern societies. Moreover, building on this analysis, the thesis evaluates the effectiveness of traditional monetary policy, namely changes in the base rate, and the impact of the variation of creditworthiness conditions in bank lending behaviour. Performing simulation experiments, the thesis elucidates channels and mechanisms through which the flourishing of the shadow banking system affects growth, stability and policy interventions of the macroeconomic system. In conclusion, the thesis supports the usefulness of the theory of the monetary circuit as a way of thinking and as a methodology used for analysing even very new phenomena of modern capitalist economies.

Item Type: Thesis (PhD)
Keywords: Monetary Circuit Theory, Financial Intermediaries, Shadow Banking System, Stock-Flow Consistent Model
Academic Units: The University of Leeds > Leeds University Business School
Depositing User: Rosa Canelli
Date Deposited: 21 Feb 2019 10:00
Last Modified: 21 Feb 2019 10:00
URI: http://etheses.whiterose.ac.uk/id/eprint/22903

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