Commentary: Crises, the spatial distribution of economic activity and the geography of banking
It is an assumption in some influential economic models that the amount of funds available in an economy is limited. However, an economy characterised by a fixed total nominal amount of funds could not experience any nominal economic growth: growth means that more transactions take place during the observation period (say one year) than in the reference period (usually the previous year). It is impossible for transactions values to grow, without the amount of money used for transactions also growing. Thus for economic growth it is a necessary and sufficient condition that the amount of money used for transactions that contribute to GDP increases. This raises the important question of just how this money can increase. Where, indeed, does money come from? And where does it go? These questions, with obvious spatial implications, have rarely been asked by researchers.
Citation:Werner, R.A. (2013) Commentary: Crises, the spatial distribution of economic activity and the geography of banking. Environment and Planning A, 45, pp. 2789-2796