The Endogeneity of Money: Evidence from the G7

Howells, Peter; Hussein, Khaled

doi:10.1111/1467-9485.00099

Cited by 37 publications

(24 citation statements)

References 20 publications

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“…1 During the same time, non-GDP transactions were also being discussed in terms of their impact on the transactions demand for money (Palley, 1995;Pollin and Schaberg;1998, Howells andHussein, 1997 Weiskopf (1979) and Pollin (1991), we compute growth rates by taking the log differences from one cycle midpoint to the next, averaged out for the number of years in that cycle, after ascribing the mean values of each variable for a given cycle to the midpoint of that cycle. 4 These include "service charges on deposits, income from fiduciary activities trading income, merchant credit, card fees, annual cardholder fees, fees from servicing mortgages, and income from loans that have been securitized" (Nelson and Owen, 1997;472).…”

Section: Discussion Of Resultsmentioning

confidence: 99%

“…First are the results of our effort to replicate Howells and Hussein (1998) for the US who show that overall bank credit Granger-causes broad money supply in all G7 countries that are included in their study. For the US, they use a sample that ends in 1992:4 and a quarterly broad money stock measure from the IMF Statistics for the U.S. economy, which differs somewhat from M2 and M3 definitions of the U.S. Federal Reserve.…”

Section: Link Between Bank Credit Deposits and Broad Moneymentioning

confidence: 99%

“…The Working with the same natural log form of the same variables in Howells and Hussein (1998), the VECM model we estimated is the exact replica of theirs.…”

Section: Appendix Imentioning

confidence: 99%

See 2 more Smart Citations

Endogenous Money in the Age of Financial Liberalization

Özgür

Ertürk

2013

Review of Political Economy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThe paper reports results that show a much weakened statistical relationship between total bank credit, total deposits and the broad money supply for the period after 1995 for the US, where no statistical causation can be discerned in either direction. This has been the result of the changing nature of the credit creation process where banks have acquired almost total independence from required reserves and core deposits in extending credit, and even an ability to circumvent the constraint posed by capital requirements through asset securitization, giving rise to an explosive increase in nonbank intermediation. As a result, the expansion of bank credit did not result in a commensurate increase of bank deposits because financial intermediation spilled over to nondepository institutions, and with the growing importance of nonbank deposits in M3, broad money supply became broader than banks' total deposits. JEL Code: B22, E12, E51

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Section: Discussion Of Resultsmentioning

confidence: 99%

Section: Link Between Bank Credit Deposits and Broad Moneymentioning

confidence: 99%

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Endogenous Money in the Age of Financial Liberalization

Özgür

Ertürk

2013

Review of Political Economy

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“…One of the underlying reasons to explain the failure of the SARB to reach predetermined M3 monetary growth targets on a consistent basis since the mid 1980s can be found in the endogenous nature of the money supply and not, as Moll's (1999) (Moore, 1989b) Structuralist view (Palley, 1994) Liquidity preference view (Howells and Hussein, 1998 Osterwald-Lenum (1992) were used to determine the deterministic components in the underlying VAR model (Harris, 1995). In each case the constant was restricted to lie inside the cointegration space without a trend.…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

The Endogenous/Exogenous Nature of South Africa’s Money Supply Under Direct and Indirect Monetary Control Measures

Nell¹

2000

Journal of Post Keynesian Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractThe main purpose of this paper is to describe South Africa's money supply process along several competing, but not mutually exclusive, theoretical paradigms over the period . The most important conclusion to be drawn from the empirical results is that irrespective of the monetary system at the time, the money supply process in South Africa is endogenously determined. The empirical analysis further shows that the inability of the South African Reserve Bank (SARB) to reach predetermined M3 monetary growth targets on a consistent basis since the mid 1980s is the direct result of an endogenous money supply and not, as a previous study claims, because of an unstable M3 velocity. Although the M3 velocity is stable over the whole period 1966-1997, money income determined an endogenous money supply, so that the M3 money supply lost its effectiveness as a leading indicator for monetary policy. The policy implication is that the SARB controlled the M3 money supply indirectly over the period 1980-1997, through an increase in interest rates, and at the potential cost of a slowdown in economic activity. JEL Classification: C22, E51, E52, E58

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“…This theoretical view has been questioned for some time and has recently become the focal point of debate, especially among practitioners [Goodhart, 1984[Goodhart, , 1994. In light of this, Howells and Hussein [ 1998] investigates whether broad money is endogenous in the G7 countries (the U.S. United Kingdom, France, Germany, Japan, Italy, and Canada). Their empirical findings reveal that it is endogenous in all cases, that is, there is unidirectional causality from loans to deposits.…”

Section: Introductionmentioning

confidence: 99%