Articles on Monetary Circuit


The Monetary Circuit Theory (MCT) goes back predominantly to the writings of Augusto Graziani and Alain Parguez. It has undergone numerous further developments since then. The core idea is to model the creation of money as endogenous to the needs of society, with a sequential analysis starting with banks granting loans to firms so as to cover their production costs and distribute income to households, until these companies can then service their banking debts through their sales and their acquisition of part of the saving of households.

Recently, there have been more and more attempts to integrate this idea into stock-flow consistent (SFC) models. The articles of Cottin-Euziol et al., Passarella and Spanò address the link between this monetary circuit and the stock-flow consistent approach and further substantiate the MCT empirically and theoretically.

The reflux phase in monetary circuit theory and stock–flow consistent models

by Edouard Cottin-Euziol, Hassan Bougrine, and Louis-Philippe Rochon

It is not la vie en rose: new insights from Graziani’s theory of the monetary circuit

by Marco Veronese Passarella

Balance-sheet restructuring in Italy: an empirical analysis based on monetary circuit theory

by Marcello Spanò