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The Endogeneity of Money: Empirical Evidence

Author

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  • Peter Howells

    (School of Economics, University of the West of England)

Abstract

For many years, the endogenous nature of the money supply has been a cornerstone of post-Keynesian economics. In this paper we survey the empirical work which has been done on both the ‘core’ thesis – that loans create deposits – and on peripheral questions such as the origin of the demand for loans, the reconciliation of the demand for money with the loan-created supply and the accommodationist/structuralist debate. The originality of the paper lies in its demonstration that while post-Keynesians may have thought they were fighting in heroic isolation, most economists involved with the real world of monetary policy-making in practice took much the same view. The consequence is that we can find empirical investigations of issues relating to the endogeneity in a wide range of locations.

Suggested Citation

  • Peter Howells, 2005. "The Endogeneity of Money: Empirical Evidence," Working Papers 0513, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    • Handle: RePEc:uwe:wpaper:0513
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    File URL: http://carecon.org.uk/DPs/0513.pdf
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    References listed on IDEAS

    as
    1. Robert Pollin, 1991. "Two Theories of Money Supply Endogeneity: Some Empirical Evidence," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 13(3), pages 366-396, March.
    2. Iris Biefang-Frisancho Mariscal & Peter Howells, 2002. "Central Banks and Market Interest Rates," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(4), pages 569-585, July.
    3. Giuseppe Fontana, 2003. "Post Keynesian Approaches to Endogenous Money: A time framework explanation," Review of Political Economy, Taylor & Francis Journals, vol. 15(3), pages 291-314.
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    5. Philip Arestis & Malcolm Sawyer (ed.), 2001. "Money, Finance and Capitalist Development," Books, Edward Elgar Publishing, number 2307.
    6. L. Randall Wray, 1992. "Commercial Banks, the Central Bank, and Endogenous Money," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 14(3), pages 297-310, March.
    7. Davidson, Paul & Weintraub, Sidney, 1973. "Money as Cause and Effect," Economic Journal, Royal Economic Society, vol. 83(332), pages 1117-1132, December.
    8. Peter Howells & Khaled Hussein, 1998. "The Endogeneity of Money: Evidence from the G7," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(3), pages 329-340, August.
    9. B. J. Moore & B. W. Smit, 1986. "Wages, Money and Inflation," South African Journal of Economics, Economic Society of South Africa, vol. 54(1), pages 48-56, March.
    10. Hewitson, Gillian, 1995. "Post-Keynesian Monetary Theory: Some Issues," Journal of Economic Surveys, Wiley Blackwell, vol. 9(3), pages 285-310.
    11. Melitz, Jacques & Pardue, Morris, 1973. "The Demand and Supply of Commercial Bank Loans," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 5(2), pages 669-692, May.
    12. repec:bla:econom:v:47:y:1980:i:188:p:407-21 is not listed on IDEAS
    13. Thomas I. Palley, 1991. "The Endogenous Money Supply: Consensus and Disagreement," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 13(3), pages 397-403, March.
    14. Hewitson, Gillian, 1997. "The Post-Keynesian 'Demand for Credit' Model," Australian Economic Papers, Wiley Blackwell, vol. 36(68), pages 127-143, June.
    15. Caporale, Guglielmo Maria & Hassapis, Christis & Pittis, Nikitas, 1998. "Unit roots and long-run causality: investigating the relationship between output, money and interest rates," Economic Modelling, Elsevier, vol. 15(1), pages 91-112, January.
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    Citations

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    Cited by:

    1. Sieroń, Arkadiusz, 2019. "Endogenous versus exogenous money: Does the debate really matter?," Research in Economics, Elsevier, vol. 73(4), pages 329-338.
    2. Josh Ryan-Collins, 2015. "Is Monetary Financing Inflationary? A Case Study of the Canadian Economy, 1935-75," Economics Working Paper Archive wp_848, Levy Economics Institute.
    3. Hein, Eckhard, 2010. "The rate of interest as a macroeconomic distribution parameter: Horizontalism and Post-Keynesian models of distribution of growth," MPRA Paper 23372, University Library of Munich, Germany.
    4. Marina Yu. Malkina & Igor A. Moiseev, 2020. "Endogeneity of Money Supply in the Russian Economy in the Context of the Monetary Regime Change," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 3, pages 8-27, June.
    5. I. Biefang-Frisancho Mariscal & P.G.A. Howells, 2012. "Income velocity and non-GDP transactions in the UK," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(1), pages 97-110, March.
    6. M. Lopreite, 2012. "The endogenous money hypothesis and securitization: the Euro area case (1999-2010)," Economics Department Working Papers 2012-EP02, Department of Economics, Parma University (Italy).

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    More about this item

    Keywords

    Money; endogeneity;

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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