Reformulation of the Main Equation

Keywords : net availabilities, second-degree working capital, dynamic savings, money multiplier, dynamic flows


The Economic concept of availabilities - different to liquidity - along with that of first- and second-class working capital, appeared in 1916 in the book Sociedad y Felicidad. Un Ensayo de Mecánica Social (Society and Happiness. An Essay on Social Mechanics) by the Spaniard Germán Bernácer. These concepts allow for a richer understanding of Economics and, particularly, of the fundamental equation of Macroeconomics: savings equal investment. This article aims to take this historic finding further, moving towards a new formulation of the concepts of availabilities and working capital.


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