Refutation of Say's Law and Dynamics of a Monetary Economy of Production

Abstract

In a monetary economy of production, Say’s law is not verified for many reasons. On the basis of these refutations, it is possible to state that the demand issued from the revenues generated by the production process is structurally lower than the value of production. We study here the dynamics of such an economy and obtain two main results. First, the long-term debt of this economy has to increase along a growth phase to enable demand to grow at the same pace as supply. Secondly, due to the repayment of this debt, the gap between supply and the demand issued from the revenues generated by the production process widens along a growth phase.