The paper presents a critique of loanable funds theory by using simple accounting relationships. It is shown that many economists identify saving and the credit supply by interpreting the macroeconomic saving-investment identity as a budget constraint. According to that interpretation, more...

The paper analyses the accounting relationships between the financial and the real economy. It will be shown that accounting can clarify the nature of economic phenomena and be an important building block for economic theory. The paper will argue that there is much confusion about key...

Most of the literature on the real exchange rate and the trade balance assumes that the trade balance reacts in the same way irrespective of whether the nominal exchange rate or the price level change. Both are seen as equivalent and the sign of the reaction of the trade balance dependent only...