We try to make Keynes' approach compatible with an endogenous theory of the money supply. For that purpose, the principle of liquidity preference is generalized within a competitive banking framework. Private banks can impose a monetary rationing independently of the central bank. Then, we analyse the consequences of a monetary policy shock on the financial behaviour of banks. We clarify the dynamic process between the monetary policy and net investment within a Minskyan approach. First, we build a Post-Keynesian stock-flow consistent model with a private-bank sector introducing more realistic features. Second, we perform some simulations.
The paper aims at showing that one of the main channels by which the US 2007 financial crisis became a real and global economic crisis is the ›confidence channel‹, i.e. that the financial crisis affected firms, banks and households' expectations and confidence, thus leading to what they were fearing. And I propose to model expectations and the state of confidence of private agents to use the indexes calculated by national statistical services from monthly polls.
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