Post Keynesian Endogeneity of Money Supply: Panel Evidence

Nayan, Sabri; Kadir, Norsiah; Abdullah, Mat Saad; Ahmad, Mahyudin

doi:10.1016/s2212-5671(13)00217-7

Cited by 27 publications

(15 citation statements)

References 23 publications

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“…Panagopoulos and Spiliotis (1998) detected endogenous money for Greece, similarly for Spain, Lavoie (2005) for Canada. Nayan et al (2013) for 177 countries with dynamic panel data for the period 1970-2011 have detected endogenous money supply. Badarudin et al (2013) have also detected money creation inside the financial system, through different sub-periods between 1975-2007 for G-7.…”

Section: Empirical Studies' Surveymentioning

confidence: 99%

Endogenous Money Supply: Turkish Economy (2011-2018)

Baştav

2021

Fiscaoeconomia

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There are two answers to the question of how money is created: according to the exogenous money hypothesis central banks have full control over the money stock in the markets and other policy instruments; whereas endogenous money theory stipulates money is created by credit demand of economic actors. Demand for credits in turn emanates from the production process of firms, triggered by changes in the production costs, basicly by a rise in nominal wages. This paper aims to analyze whether money supply creation is endogenous in Turkish money markets during the period 2011-2018 by monthly data, for which cointegration between money supply (money base, M1, M2) and credits is tested by Johansen method and VECM is estimated for specifying direction of causality between the variables. As a robustness check of the causality obtained from VECM long and short run analysis, cpi inflation is added to the model and a four variate Toda Yamamoto VAR is estimated. Results point at causality from credits to money supply and that credits extended by banks form basis of the money supply.

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Section: Empirical Studies' Surveymentioning

confidence: 99%

Endogenous Money Supply: Turkish Economy (2011-2018)

Baştav

2021

Fiscaoeconomia

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“…They used the Granger causality test for their analysis. Using panel data analysis, Nayan et al (2013) dealt with the nature of the money supply in 177 countries for the years 1970 to 2011. The authors concluded that the money supply is endogenous, as asserted by the post-Keynesians.…”

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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“…According to these tests, the money supply was found to be endogenous. Nayan, Kadir, Abdullah and Ahmad (2013) used panel data analysis to examine the endogeneity of money supply of 177 countries' economies for the period of 1970-2011. The money supply was found endogenous, as the central banks of these countries` started implementing interest rate targeting strategy.…”

Section: View Of Economic Schoolsmentioning

confidence: 99%

Optimal policy instrument selection in monetary policy: endogeneity of money supply

İncekara¹,

Amanov²

2017

Pressacademia

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Purpose-Nowadays, the central bank's primary objective is price stability which is defined as low and stable inflation. The central bank has to fulfill some institutional and operational conditions to achieve this goal. One of the operational conditions is the selection of the appropriate policy instrument to implement the monetary policy. The central bank can choose interest rate or monetary base as policy instrument. The main question of this paper is whether the monetary base the optimal instrument. The choice of monetary base as a policy instrument is dependent on the exogeneity of money supply, which means that the money supply is controllable by monetary base. Methodology-This paper investigates endogeneity of money supply of Turkey for a sample period of 1990-2016 using Johansen cointegration test. Findings-As a research method, the Johansen cointegration test and VECM is used to show long-run relationships and causality between variables and Granger causality test is used to examine short-run causality between the variables. Conclusion-It is seen that CBRT has very limited control over money supply, thus monetary base may not be optimal policy instrument to ensure price stability.

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Post Keynesian Endogeneity of Money Supply: Panel Evidence

Cited by 27 publications

References 23 publications

Endogenous Money Supply: Turkish Economy (2011-2018)

Endogenous Money Supply: Turkish Economy (2011-2018)

Endogeneity of money: The case of Сzech Republic

Optimal policy instrument selection in monetary policy: endogeneity of money supply

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