УДК 330.101.541

РОЗМАЇНСЬКИ І.В., Санкт-Петербурзький філіал Вищої школи економіки, м. Санкт-Петербург, Росія

Розмаїнськи І.В. - к.е.н., доцент Санкт-Петербурзького філіалу Вищої школи економіки

INSIDE MONEY, BUSINESS CYCLES AND STAGFLATION

У статті розглядаються відомі теорії стагфляції - монетаризм, нова класична, кейнсіанська, посткейнсіанська. Відповідно до них, стагфляція генерована екзогенними факторами: державною політикою або шоками пропозиції. Автор робить спробу в статті довести, що стагфляція може бути ендогенною, вбудованою в сучасну ринкову економіку.

The article deals with famous theories of stagflation - Monetarist, New Classical, Bastard Keynesian and Minskian. According to all these theories stagflation is generated by exogenous factors: the government policy or (adverse) supply shocks. The author tries to prove in this article that stagflation can be endogenously inherent to the modern advanced market economy.1 Introduction

Stagflation is a comparatively new (35-40 years) feature of the advanced market economy. All famous theories of stagflation - Monetarist, New Classical, Bastard Keynesian and Minskian ones - have one common point. According to all these theories stagflation is generated by exogenous factors: the government policy or (adverse) supply shocks. We shall try to prove in this article that stagflation can be endogenously inherent to the modern advanced market economy.

The modern advanced economy is the "inside money economy" (Dow and Earl, 1982: Ch. 9). A huge part of the money supply is the (private) credit money that is both asset and liability of the private sector. In other words, in the inside money economy money is simultaneously a debt. This fact complicates many relationships between macroeconomic variables. On the one hand, monetary aggregates are the only means of financing expenditures. The more is the money supply, the more are aggregate expenditures, and aggregate demand will be. On the other hand, money is a debt, and the liquidation of this debt can absorb a lot of financial resources. In other words, the more is stock of the outstanding debts (inside money) and the closer is maturity date, the less financial resources available for the expenditures will be. It turned out, that the relation between macroeconomic situation and the (inside) money stock is ambiguous.

This ambiguity appears in the phase of slump of the business cycle. As Minsky (1977, 1986) has proved, the slumps in the modern advanced economies are the causes and the consequences of the inability of the business sector to meet cash payments commitments that grow out of debts borrowed in the phases of expansion and boom. The goals and purposes of the majority of the households and the firms change during the slump. The immediate redemption of debts becomes the main purpose of many agents in this phase of the business cycle. Such change in the goals and purposes can alter relationships between the main macroeconomic variables in the output market.

II. The Output Market

a) The relationship between aggregate demand and the price level. The orthodox macroeconomic theory proves the presence of negative slope of aggregate demand curve by means of Pigou effect, Keynes effect and net export effect. But Keynes effect (the price level - the demand for money - the interest rate - investment - aggregate demand) can be negligible if investments are driven first of all by animal spirit and the state of confidence. When trade barriers are strong, then the net export effect (the influence of the price level on the export and the import) also does not matter. In the phase of slump Pigou effect (the price level - the real money supply - consumption - aggregate demand) is outweighed by Fisher effect. This effect consists in the increase in the real debt burden because of the fall in the price level. Such increase causes the wave of bankruptcies and economic collapse (Fisher, 1933, Minsky, 1986). It is clear, that it is in the phase of contraction that Fisher effect plays the enormous role. We believe that in this phase of business cycle Fisher effect becomes more than the sum of Pigou, Keynes and net export effects. The slope of aggregate demand curve can be a positive in the phase of slump. The idea of positive relationship between the price level and aggregate demand under the inside money was already put forward in "non-Neoclassical" economic literature (Fazzari and Minsky, 1984, Caskey and Fazzari, 1986). We stress the importance of the phase of slump for the emergence of this unusual relationship.

b) The relationship between aggregate supply and the price level. As we mentioned above, the business firms in the phase of contraction try to liquidate their debts immediately. We believe that the firms do not maximize (long-term) profit in that situation. Really, the business sector aspires quickly to earn revenue sufficient for the redemption of the debts. It means that the