Indebtedness and Mercantilism

Abstract

In a closed economy, the growth of the GDP is equal to the net indebtedness (the increase of indebtedness) of it agents from one period to another, which allows current demand to be greater than the income of the preceding quarter. In an open economy, we must add to that the net indebtedness of the totality of foreign agents in operation: the currencies corresponding to the foreign trade balance. Depending on the sign of these two kinds of net indebtedness, positive or negative, a classification of countries can be made: mainly mercantilist countries that enjoy a foreign surplus, on the one hand, and “Keynesian” countries running a deficit, whose growth is founded upon domestic demand, on the other hand.

Key words: Foreign trade, Mercantilism, Net indebtedness, Domestic demand.
JEL: E01, E29, F43, F53.