The traditional private channel of money creation is production credit, to which recent innovations have added the channel of consumption credit. Since household debt has only in recent decades become a relevant economic phenomenon, traditional consumption theories do not take such aspects into serious account. Nevertheless, traditional theories allow for a change in the institutional and the psychological determinants of behavior over time, which might enhance the effect of some of the factors they mention or even let new ones emerge. This project examines the interaction between big corporations/banks, small firms, and households, thereby defining a stylized economic paradigm, characterized by a broad access to credit on one side and an oligopolistic control of the financial flows on the other.
Finance Without Crises