Further insights on endogenous money and the liquidity preference theory of interest

Arbeitspapier

We present a simple stock-ow consistent (SFC) model to discuss some recent claims made by Angel Asensio in the Journal of Post Keynesian Economics regarding the relationship between endogenous money theory and the liquidity preference theory of the rate of interest. We incorporate Asensio's assumptions as far as possible and use simulation experiments to investigate his arguments regarding the presence of a crowding-out effect, the relationship between interest rates and credit demand, and the ability of the central bank to steer interest rates through varying the stock of money. We show that in a fully-specified SFC model, some of Asensio's conclusions are not generally valid (most importantly, the presence of a crowding-out effect is ambiguous), and that in any case, his use of a non-SFC framework leads him to ignore important mechanisms which can contribute to a better understanding of the behaviour of interest rates. More generally, this paper hence once more demonstrates the utility of the SFC approach in research on monetary economics 1930s.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: FMM Working Paper ; No. 17

Klassifikation und Themen

• Klassifikation: Wirtschaft ; General Aggregative Models: Keynes; Keynesian; Post-Keynesian ; Money and Interest Rates: General ; Interest Rates: Determination, Term Structure, and Effects
• Thema: Horizontalism ; structuralism ; endogenous money ; interest rates ; stock-flow consistency

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Lavoie, Marc ; Reissl, Severin
• Ereignis: Veröffentlichung
• (wer): Hans-Böckler-Stiftung, Macroeconomic Policy Institute (IMK), Forum for Macroeconomics and Macroeconomic Policies (FMM)
• (wo): Düsseldorf
• (wann): 2018

Weitere Informationen

• Handle: http://hdl.handle.net/10419/181475
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ