The theory of the monetary circuit
The theory of the monetary circuit

Summary/Abstract: The present paper reviews the pre-history, the process of formation and the possible directions of future development of the theory of monetary circuit. The author reveals the main theoretical constructions of Graziany and the other leading representatives of the circuitist school. The principles of derivation of transaction and balance sheet matrices reflecting the main ideas of the theory are discussed. The dynamic variants of the theory as well as the connection between the circuitist approach and the input-output model are subject to examination. The paper studies the possibility the circuitist approach to be further broadened on the basis of the mathematical graphs theory. The author emphasizes that the theory of monetary circuit denies the neoclassical dichotomy and rejects the postulate of the neutrality of money. The opportunity is also offered to upgrade the monetary circuit theory by using the mathematical graph theory. The paper includes also a critical evaluation of the presented theory.

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