2013년 11월 25일 월요일

[Godley & Lavoie's Monetary Economics] 2. Balance Sheets, Transaction Matrices and the Monetary Circuit

출처: Wynne Godley and Marc Lavoie, Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth (Palgrave Macmillan, 2007)

※ 발췌 (reading notes with excerpts):

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Chapter 2. Balance Sheets, Transaction Matrices and the Monetary Circuit 


2.1 Coherent stock-flow accounting

Contemporary mainstream macroeconomics, as it can be ascertained from intermediate textbooks, is based on the system of national accounts that was put in place by the United Nations in 1953ㅡthe so-called Stone accounts.  At that time, some macroeconomists were already searching for some alternative accounting foundations for macroeconomics.  In the United States, Morris A. Copeland (1949), an institutionalist in the quantitative Mitchell tradition of the NBER, designed the first version of what became the flow-of-funds accounts now provided by the Federal Reserve since 1952ㅡthe Z.1 accounts.  Copeland wanted to have a framework that would allow him to answer simple but important questions such as:
  • When total purchases of our national product increase, where does the money come from to finance them? 
  • When purchases of our national product decline, what becomes of the money that is not spent?' (Copeland 1949 (1996: 7)).
   In a macroeconomic textbook that was well-known in France, Jean Denizet (1969) also complained about the fact that standard macroeconomic accounting, designed upon Richard Stone's social accounting, as eventually laid out in the 1953 United Nations System of National Accounts, left monetary and financial phenomena in the dark, in contrast to the approach that was advocated from the very beginning by some accountants (among which Denizet) in the Netherlands and in France.
  • In the initial standard national accountingㅡas was shown in its most elementary form with the help of Table 1.1ㅡlittle room was left for banks and financial intermediaries and[,] the accounts were closed on the basis of the famous Keynesian equality, that saving must equal investment. 
  • This initial system of accounts is a system that presents the sector surpluses that ultimately finance real investment, but it does not present any information about the flows in financial assets and liabilities by which the saving moves through the financial system into investment.  These flows in effect have been consolidated out (Dawson 1991 (1996: 315)).  
In standard national accounting, as represented by the National Income and Product Accounts (NIPA), there is no room to discuss the questions that Copeland was keen to tackle, such as the changes in financial stocks of assets and of debts, and their relations with the transactions occurring in the current or the capital accounts of the various agents of the economy.  In addition, in the standard macroeconomics textbook, households and firms are often amalgamated within a single private sector, and hence, since financial assets or debts are netted out, it is rather difficult to introduce discussions about such financial issues, except for public debts.

   The lack of integration between the flows of the real economy and its financial side greatly annoyed a few economists, such as Denizet and Copeland.  For Denizet, J.M. Keynes's major contribution was his questioning of the classical dichotomy between the real and the monetary sides of the economy.  The post-Keynesian approach, which prolongs Keynes's contribution on this, underlines the need for integration between financial and income accounting, and thus constitutes a radical departure from the mainstream.[n.1]  Denizet found paradoxical that standard national accounting, as was initially developed by Richard Stone, reproduced the very dichotomy that Keynes had himself attempted to destroy.  This was surprising because Stone was a good friend of Keynes, having provided him with the national accounts data that Keynes needed to make his forecasts and recommendations to the British Treasury during the Second World War, but of course it reflected the initial difficulties in gathering enough good financial data, as Stone himself later got involve in setting up a proper framework for financial flows and balance sheet data (Stone 1966).[n.2]
[n.1] Such an integration of financial transactions with real transactions, within an appropriate set of sectors, was also advocated by Gurley and Shaw (1960: ch. 2) in their well-known book, as it was by a number of other authors, inspired by the work of Copeland, Alan Roe (1973) for instance, whose articles was appropriately titled 'the case for flow of funds and national balance sheet accounts'.
[n.2] Various important surveys of flow-of-funds analysis and a stock-flow-consistent approach to macroeconomics can be found, among others in Bain (1973), Davis (1987), Patterson and Stephenson (1988), Dawson (1996).
   By 1968 a new System of National Accounts (SNA) was published by the national accountants of the UN.  This new system provided a theoretical scheme that stressed the integration of the national income accounts with financial transactions, capital stocks and balance sheets (as well as input-output accounts), hence answered the concerns of economists such as Copeland and Denizet.  The new accounting system was cast in the form of a matrix, which started with opening assets, adding or subtracting production, consumption, accumulation and taking into account reevaluations, to obtain, at the bottom of the matrix, closing assets.  This new integrated accounting system has been confirmed with the revised 1993 SNA.

   Several countries now have complete flow-of-funds accounts or financial flows accounts, as well as national sheet accounts, so that by combining the flow-of-funds accounts and the national income and product account, and making a few adjustments, linked in particular to consumer durable good, it is possible to devise a matrix that accomplishes such an integration, as has been demonstrated by Backus et al. (1980: 270-1).  The problem now is not so much the lack of appropriate data, as shown by Ruggles (1987), but rather the unwillingness of most mainstream macroeconomists to incorporate these financial flows and capital stocks into their models, obsessed as they are with the representative optimizing microeconomic agent.  The construction of this integrated matrix, which we shall call the transaction flow matrix, will be explained in a later section.  But before we do so, let us examine a simpler financial matrix, one that is better known, the balance sheet matrix or the stock matrix.
cf. Backus, D., W.C. Brainard, G. Smith and J. Tobin (1980) ‘A model of U.S. financial and nonfinancial economic behavior’, Journal of Money, Credit, and Banking, 12 (2) (May),
pp. 259–93.

2.2 Balance sheets or stock matrix  (p. 25; 70)

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