The Structure–Agency Relation of Growth Imperative Hypotheses in a Credit Economy

Kimmich, ChristianORCID: and Wenzlaff, Ferdinand (2021) The Structure–Agency Relation of Growth Imperative Hypotheses in a Credit Economy. New Political Economy.

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Growth dynamics are often explained by insatiable wants or anthropological constants, modelled as preferences and behavioural axioms. By contrast, structural perspectives postulate a growth imperative due to macroeconomic or monetary system-inherent properties. Reconciling both perspectives, we develop a relational structure–agency framework to evaluate growth imperative hypotheses. We analytically separate the credit structure (including balance-sheet mechanics and nominal uncertainty) from institutional structure, and describe decision norms for households, entrepreneurs, commercial banks, central bank, and the state. Our framework suggests that the interplay of credit principles, income-dependent saving and portfolio saving rationales prevent the interest rate from adjusting downwards and thereby cause mature credit economies to stagnate. Underemployment results in growth policies becoming the dominant norm – seeking, under budget constraints, to overcome declining growth rates. Our method helps identifying agency to resolve this imperative. Preventing real asset inflation to relieve monetary policy at the effective lower bound appears essential.

Item Type: Article in Academic Journal
Keywords: Stagnation, institutional macroeconomics, social ontology, monetary theory, land value tax
Funders: European Union (Horizon 2020)
Research Units: Former Research Groups (until 2022) > Regional Science and Environmental Research
Date Deposited: 13 Oct 2021 11:00
Last Modified: 20 Mar 2023 13:35
DOI: 10.1080/13563467.2021.1952557

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