A brief note on Mathias Binswanger’s model

Abstract:

An increasing number of economists agree that modern market economies are subject to a growth imperative: zero growth is not a feasible state in the long run. This result is shown differently by various authors. Mathias Binswanger pretends to establish the growth imperative of modern market economies by making the link between money creation and firms’ profits. If Binswanger’s strictly positive minimal steady state growth solution is binding, so is the minimal growth derived from the money creation rule but the reverse is not true. In other words, it is sufficient to consider the money creation rule for the feasible solutions in his model; the link between firms’ profits and money creation is missing. Nevertheless, the basic message of his model is not discredited: there is a growth imperative in capitalist economies regardless of risk considerations.

Key words::

• credit money
• growth

The author is grateful to the anonymous referees for their valuable remarks.

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Notes on contributors

Zsolt Gilányi

Zsolt Gilányi is an associate professor and head of the Institute for Social and Economic Sciences at the University of West Hungary, Faculty of Economics.