Nicholas Kaldor on endogenous money and increasing returns

By Guglielmo Forges Davanzati

PKES Working Paper 1505

March 2015

Nicholas Kaldor’s contribution to economic theory covers a wide range of topics, elaborated in different historical contexts, such as theories of economic growth and the balance of payments, studies on interregional divergences and monetary theory. In most cases, historians of economic thought have devoted their attention to single aspects of his contributions. This paper aims at integrating Kaldor’s monetary theory and his view of the relevance of increasing returns. His theory of endogenous money is very similar to the view proposed in the contemporary monetary theory of production, and, in this respect, Kaldor’s contribution can certainly be considered an “antecedent” of this line of thought.

Keywords: Endogenous money, aggregate demand, labour productivity

JEL classification: B30 E40 O40