I have put my
PhD dissertation plus 24 papers/notes on this web site. They
are mostly in Portable Document Format (pdf). I give the Titles, links
to the files, and (sometimes) abstracts of the papers. As you
will observe, there is some overlap between a couple of them.
All have me as sole author, except one.
also put an "economics
file) here. It contains five powerpoint presentations
given in september 2013 at FLACSO in
Quito, Ecuador - all about stock-flow economics in
continuous time. The five ppt presentations regularly point
to pages - indicated with large numbers in red - in a 102
pages article collection, which is also in the zip file.
Many of the articles below are in this collection.)
Here is my PhD dissertation, October 2018:
On the Dynamics of Money Circulation, Creation and Debt – a Control Systems Approach.
Sums up things I have been working on for 20 years - on and off. Mostly off, so things have taken time :-)
and how to start a national parallel electronic
currency in Italy – and why it would work – fast
paper, 12 August 2020. The
first version was published last year in the Real-World
Review, issue 89, 1 October 2019.
a type of government bond as a supplement in a dollarized
ABSTRACT: A country that does not issue its own currrency is dependent on a foreign currency, for example USD or EUR (we use "$" for convenience in this note). The country’s government is then extra constrained, because it cannot create more national currency when needed. At the same time there may be a strong political resistance to leaving the foreign currency and (re)introducing a national currency. This paper discusses the alternative of introducing some nationally issued instrument that can function as an additional means of payment, not only from the government to providers, but also between agents in the private sector. The option launched here is a form of bond that the government uses to pay providers and individuals, in addition to using the scarce foreign currency. For such bonds to gain confidence, it is assumed that they may be used to pay taxes, counting at the nominal foreign currency value of the issued bond.The bond exists only as an electronic deposit at the central bank, not as a paper document.
proposal for creating a complementary currency in Greece
with co-author Robert W. Parenteau
(page 2 in the Real-World Economics Review, issue 71, 28 May 2015)
ABSTRACT: This paper describes the concept of a national “complementary” or “parallel” currency, and the advantages of implementing it in the form of purely electronic money – no bills and coins. It suggests a fairly detailed program for how a parallel or complementary currency to the euro could be introduced in a crisis-hit eurozone country, focusing on Greece. Finally, some questions and counterarguments are addressed.
The Central Bank with an expanded role in a purely electronic monetary system
(page 66 in the Real-World Economics Review, issue 68, 21 august 2014)
ABSTRACT: Physical currency
(bills and coins) is being phased out as an important means of
exchange both in developed and developing countries.
Transactions are increasingly done by debit card, computer, and
mobile phone. This technologically driven process opens up some
very useful possibilities, among these new and -- for society --
beneficial roles for the Central Bank. The paper assumes a
scenario where the country in question issues its own currency,
and all money is "electronic" -- no bills and coins. This gives
an extra impetus to the sovereign money solution; all deposits
are at the Central Bank.
The paper also argues that in such a system -- where banks are not allowed to create "credit money" when issuing loans (in this resembling the "100% reserve" solution supported by many reformers) -- the economy need not, in spite of this, be "starved" of credit for investment -- a warning that is not only sounded by the defenders of today's financial system, but also by many of its critics. This goal might be achieved by the unconventional trick of letting commercial banks create the needed sovereign money at the Central Bank for their lending.
A third point of the paper is to argue that simplification of the financial system should be a goal in itself.
A simple proposal to kill high frequency trading in the stock market
This is a short note (also here, in the Real World Economics blog) that suggests how one could get rid of the current parasitical and absurd automated microsecond-scale trading activity. It can also be applied to reduce "day trading".
Physical and social systems may be modeled with the same sort of tools!
This is a short note challenging heterodox economists that are "math-averse", more generally arguing for systems theory applied to human groupings.
are able to create additional credit money (bank-m-creation.pdf)
This note tries to explain, in a simple manner via an imagined example, how a bank is able to create extra "credit money" when lending. A less intuitive and more comprehensive treatment is in this paper below.
No, there need not be lack of
credit with "100 % money" (credit-100pc.pdf)
(This is a brief note.)
Control with Electronic Money and Modern Monetary Theory
advantages and two possibilities with a parallel electronic currency (mobile-dollars.pdf)
(This is a one-page note summing up and extending the main points in the first paper below)
27/1-2012 for the The German
Association for Small and Medium-sized Businesses.)
A recipe for a country to gradually and possibly exit from the eurozone through a parallel emergency currency realised via the mobile phone network (paper-wolfson.pdf)
Capitalists can enjoy a
persistent profit flow in an economy with no injection of
fresh money (profit-poss2.pdf)
(This is a brief provocative note.)
ABSTRACT: There is
a large and elaborate literature in economics about the
(in)feasibily of capitalists in the aggregate enjoying a stable
profit. Many conditions have been put forward for this to be
feasible, for instance that extra ("fresh") money must be
persistently added to the system, typically in the form of bank
credit. This brief note argues that this is not necessary, and
that this is very simple to conclude by using a continuous time
linear model of a closed economic circuit. The paper also
explains Marx' m-c-m' puzzle. Furthermore it argues that a
constant -- not falling -- profit rate is feasible, and that
this profit rate is independent of capitalists' share of output.
The fundamental mechanism behind the global financial crisis (sysdyn-debtcrisis.pdf)This is a lecture note (October 2011) for my students in system dynamics. It is very simple, but because of that I believe it makes the crucial point clear.
Greeks did this?
- A high-tech parallel monetary system for the underdogs (greece-etc-2.pdf)
presented and in the proceedings of the 9th Society of Heterodox
Economists Conference, December 6 and 7 2010, UNSW, Sydney. The paper was revised in October
2011. The first, and shorter,
version appeared in Counterpunch
June 25 - 27, 2010. The
version is here, in the Real-World
Review, issue 59, 12 march 2012.
ABSTRACT: One prominent characteristic of the
decades-long run-up to today's global financial crisis is the
increasing relative size of debt and the financial sector in
countries' economies. A mechanism explaining this, related to
financial accumulation through non-financial capitalists'
lending, is explored. The exercise also leads to the
conclusion that in the aggregate, financial accumulation by
capitalists through the alternative option of real-economic
investment, is not feasible.
(This is a working paper).
Fundamental financial accumulation dynamics (accum-08.pdf)
ABSTRACT: Any economic system with interest on money
lent has the potential to gradually develop a level of debt
that leads to crisis. Parameters and simple laws for the
dynamics of financial accumulation are proposed and explored.
It turns out that concepts from linear control systems theory,
and continuous-time representation, are very useful for this
exercise. It is argued that the problem of "exploding" debt is
grave and largely ignored.
(This is a working paper).
Basel rules, endogenous money growth, financial accumulation and debt crisis (basel.pdf)
ABSTRACT: A Basel-type bank regulation regime has the
side effect of endogenous money growth. The growth rate turns
out to be inversely proportional to the required minimum
capital/asset ratio. This money growth contributes to avoiding
debt crises, as opposed to non-bank lending which increases
debt but not money stock, and is therefore dangerous in the
long run. Banks often prefer to sell loans onwards. It is
shown that this doesn't only decrease the bank's risk, it may
also imply faster asset growth for the selling bank by
allowing an increase in the flow of new extended loans.
(In: proceedings of the 12th Path to Full Employment Conference and the 17th National Conference on Unemployment, the University of Newcastle, Australia, December 2-3, 2010)
A block diagram approach to macroeconomics, and why IS/LM is fatally flawed (system-econ.pdf)
ABSTRACT: A dynamic model of an individual, and then
an aggregate (sector), economic unit is developed. This model
and other building blocks are employed to create macroeconomic
models represented through block diagrams. A simulation tool
based on block diagram representation is applied to a simple
textbook economy with firms and households. Finally, a dynamic
extension of the IS/LM static model is presented in block
diagram form, and it is demonstrated through the dynamic
extension that IS/LM's way of treating money stock is flawed
to a degree that implies that IS/LM must be discarded.
(This is a working paper).
A critique of a Post Keynesian model of
hoarding, and an alternative model (hoarding.pdf)
ABSTRACT: The concept of a "propensity to hoard" is frequently used by Post Keynesians and Circuitists in time-discrete models of the macroeconomy, to account for how households manage their flow of savings. This concept is argued to be erroneous -- and continuous circuit models are better than discrete for a clear understanding of this. The phenomenon of time dispersion of circulating money is discussed -- also impulse functions and first order differential equations as building blocks in a network. Finally, these components and concepts are used to assemble and simulate a circuit model with debt. Even at high interest and savings rates the system evolves without ending in debt-induced crisis.
(Journal of Economic Behavior & Organization., Vol 60/2, pp 230-251, June 2006)
Overvaluation − not volatility − is the main danger in stock markets
Real-world stock markets are volatile and expresses such
traits as overvaluation, psychological moods, cycles and
crashes. This paper develops and explores a model which have
these properties. The model is aggregated, continuous and
non-linear. It is developed in stages. In the initial stage
it is applied to the price dynamics of one type of stock
only. Later on it is applied to a weighted price index of
different stocks, to try to capture the dynamics of a stock
exchange as a whole. The purpose of the model is to gain
insight both into short-term dynamics and stability
properties, and the dynamics of long-range cycles and
crashes. Based on the model, the transaction tax reform
proposal to stabilise stock markets is discussed and
rejected. Another and new stabilising idea is presented −
substituting a stock with a type of bond.
(This is a working paper.)
A fairly similar paper, built on the same model, is this:
A countercyclical fee to
eliminate long-term stock market booms and busts (stockm-fee.pdf)
(This is a working paper.)
The dynamics of long-range financial accumulation and crisis (
dynamic model of money stock/flow relations for a generic
economic agent is developed, and employed to model and discuss
the long-range (decades) impact of returns on any form of
saved or invested money on a macroeconomy. It is shown that,
subject to realistic assumptions about behavior of economic
agents, a macro-economic system with positive returns must
eventually reach a depression-like economic state. The
observed disproportionate growth of financial sectors in
recent years is explained by the proposed model. Simulation
runs are presented. An indicator for economic fragility is
(In Nonlinear Dynamics, Psychology, and Life Sciences, Vol. 3 No. 2 April 1999.)
introduction on A.W. Phillips' "hydraulic" macroeconomic
models is given. His (and others economists') notion that a
macroeconomy may reasonably be considered to have dynamics
corresponding to a first order time lag transfer function, is
justified in this paper by aggregation of individual micro
agents. In connection with this economic application, I derive
and discuss a theorem and some rules for general networks of
time lagged blocks. Finally, Monte Carlo simulations of
networks of micro agents are undertaken, supporting the
validity of the first order time lag aggregate model.
(Modeling, Identification and Control, vol. 19 no. 4, 1998.)
Hirschman introduced the terms "voice" and "exit" to
characterise the two main means for individual influence in an
organisation. One may try to change something by speaking up
or voting for another leadership "voice". Or one may quit the
organization "exit". As a consumer, your option is "exit" only
by stopping buying a given product. Your "voice" will never
reach the corporation, or it will be ignored. This paper
describes a simple and cost-free reform to give consumers
effective "voice": free discussion pages about a corporation's
products and practices by law prominently linked from its main
web page and referred to in its advertising. Corporations are
obliged to reply and participate. Corporations'
compliance is supervised by a public consumer's agency.
(First Monday, volume 4, number 1, 1999.
For those who read Norwegian: EnHYPERLINK "http://www.aftenposten.no/meninger/kronikker/article367905.ece" utvidet versjon av denne artikkelen sto som kronikk i Aftenposten, 22. juli 2002)