Exogenous or Endogenous Money Supply: Evidence From Australia

Badarudin, Zatul E.; Khalid, Ahmed M.; Ariff, Mohamed

doi:10.1142/s0217590812500257

Cited by 8 publications

(3 citation statements)

References 18 publications

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“…The empirical conclusions support the structuralist and preference theories. Badarudin et al (2012) tested for an endogenous money supply in Australia for the years 1977 to 1993. The authors determined that loans affect the money supply.…”

Section: Literature Reviewmentioning

confidence: 99%

Endogeneity of money: The case of Сzech Republic

Černohorská¹

2018

Journal of International Studies

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The goal of this paper is to specify the trends of money supply in Czech Republic. This will allow us evaluate the current approach taken by the Czech National Bank in its monetary policy. To determine money's endogeneity, we have analyzed time series for the M3 monetary aggregate, the monetary base, GDP, and loans. As part of the analysis, we have worked with quarterly data from the 1 st quarter of 1996 to the 2 nd quarter of 2017. We determined the optimal lag time for the time series using the Hannan-Quinn information criterion. Next, we have analyzed the stationarity of the time series using the Dickey-Fuller test. We have further tested the stationary time series with the Engle-Granger test. Testing long-term relationships using the Engle-Granger cointegration test between the money supply (expressed by the M3 monetary aggregate) and both GDP and loans, and then between the money base and loans did not confirm long-term relationships between the values examined. Therefore, we can consider the money supply in Czech Republic to be endogenous. Two-way causal relationships between M3 and both GDP and loans as well as between the monetary base and loans was confirmed using the results of Granger causality testing as a basis.

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Section: Literature Reviewmentioning

confidence: 99%

Endogeneity of money: The case of Сzech Republic

Černohorská¹

2018

Journal of International Studies

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“…Moore (1983) argued that money creation is mainly driven by the demand for loans. The hypothesis of money being endogenously determined gains econometric support in the findings of Badarudin et al (2012Badarudin et al ( , 2013. As to the equilibrium condition that money supply equals money demand, different mechanisms have been proposed [see Howells (1995) and references therein].…”

Section: Introductionmentioning

confidence: 99%

A Short Note on the Net Stable Funding Ratio Requirement with Endogenous Money

Kauko

2016

Economic Notes

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The Net Stable Funding Ratio (NSFR) regulation stipulates that banks’ available stable funding shall be at least equal to the required stable funding. This should reduce banks’ liquidity risks. In the current monetary system, deposit money is created by lending, but the NSFR requirement restricts the possibilities to grant loans, limiting the availability of stable funding. In a closed economy, this contradiction poses no macroeconomic problems. However, the outcome may be unstable if there is a substantial amount of foreign debt financed via the international interbank market; a minor shock can have a drastic impact on loan and deposit stocks.

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“…Moore (1983) argued that money creation is predominantly driven by the demand for loans. The hypothesis of money being endogenously determined finds econometric support in the findings of Badarudin et al (2012Badarudin et al ( & 2013. As to the equilibrium condition that money supply must equal money demand, different mechanisms have been proposed (See Howells 1995 and references therein).…”

Section: Introductionmentioning

confidence: 99%