The Experts below are selected from a list of 54 Experts worldwide ranked by ideXlab platform
Thomas I. Palley - One of the best experts on this subject based on the ideXlab platform.
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The Theory of endogenous Money and the LM schedule: prelude to a reconstruction of ISLM
Revista de Economia Política, 2017Co-Authors: Thomas I. PalleyAbstract:Money is at the center of macroeconomics, which makes understanding the Money Supply central for macroeconomic Theory. This paper presents the Post Keynesian Theory of endogenous Money Supply and shows how it is fundamentally different from the conventional Money Supply Theory. The conventional approach relies on the Money multiplier and bank lending is invisible. Post Keynesian Theory discards the Money multiplier and focuses on bank lending which drives Money creation. The paper emphasizes the structuralist version of Post Keynesian Theory which retains Keynes’ liquidity preference Theory of long term interest rates and also recognizes banks are subject to financial constraints that limit their lending activities. The paper then shows how to derive the LM schedule in an endogenous Money economy, which is a necessary prelude to reconstructing the ISLM model.
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post keynesian economics debt distribution and the macro economy
1996Co-Authors: Thomas I. PalleyAbstract:Preface - Introduction - The Emergence of Theoretical and Institutional Coherence in Post Keynesian Economics - The Principle of Effective Demand and the Keynesian Revolution in Equilibrium Economics - Aggregate Demand and Price Adjustment: Pigou Versus Fisher -Expected Aggregate Demand, the Production Period, and the Keynesian Theory of Aggregate Supply - Uncertainty and Expectations - The Endogenous Money Supply: Theory and Evidence -Endogenous Finance - Aggregate Demand and Finance: A Post Keynesian Short Period Macro Model - The Phillips Curve and Demand Pull Inflation - Cost-Push and Conflict Inflation - Debt, Aggregate Demand, and the Business Cycle - Competing Visions: A Post Keynesian Summing Up - Index
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the endogenous Money Supply Theory and evidence
1996Co-Authors: Thomas I. PalleyAbstract:Thus far, the focus of inquiry has been on the effect of price level adjustment on aggregate demand and Supply, and on the ability of price and nominal wage adjustment to ensure full employment equilibrium. During the course of this inquiry the financial sector has been restricted to the background, and quantities of financial assets and liabilities have been taken as given. It is now time to turn to an investigation of the financial sector, and examine how the Money Supply and other financial magnitudes are determined. Later, in Chapter 9, this examination of the financial sector will be joined with our earlier examination of the operation of goods markets to provide a full Post Keynesian model of the determination of the level aggregate economic activity.
Mohamed Ariff - One of the best experts on this subject based on the ideXlab platform.
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Post-Keynesian Money endogeneity evidence in G-7 economies
Journal of International Money and Finance, 2013Co-Authors: Zatul E. Badarudin, Mohamed Ariff, Ahmed M. KhalidAbstract:Post-Keynesian Theory of Money endogeneity emphasizes the importance of bank loans causing Money Supply changes. Thus, the proponents of endogenous Money Supply assert banks create Money by meeting Money demands of economic agents. Money is said to originate as bank-created loans from deposits, which in turn create more loans under the endogenous Money Supply. The traditional Money Supply Theory asserts that deposits create Money, so Money is exogenously created. This paper provides new evidence on endogenous Money Supply across G-7 economies over 26 years using quarterly data with controls for monetary regime change effects. Bank loans cause Money Supply, hence Money is endogenous and the monetary regime effect appears to hold as crucial factors in Money Supply Theory. Money Supply behavior is exogenous during two short periods in the UK and the US when monetary targeting policies were in place.
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Money Supply, interest rate, liquidity and share prices: A test of their linkage
Global Finance Journal, 2012Co-Authors: Mohamed Ariff, Tin-fah Chung, Mohamad ShamsherAbstract:The Money Supply impacts on interest rate and liquidity were first proposed in 1961 by Friedman, the late Nobel laureate. The liquidity effect has yet received unanimous empirical support. Also, research interest on liquidity subsided in the 2000s. Using quarterly data over 1960–2011 and simultaneous solution to a system of equations, this paper reports positive liquidity effect from Money Supply. By extending the system of equations with a liquidity equation and after controlling the effect of earnings, evidence is found of a significant positive effect from liquidity on share prices. Money Supply is found to be endogenous as in post Keynesian Theory. These findings, obtained after solutions to several econometric deficiencies in prior studies, provide clear verification of the endogenous Money Supply Theory, Money effect on liquidity and on the extension of the model for a liquidity effect on asset prices.
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Money Supply endogeneity and bank stock returns
Applied Financial Economics, 2011Co-Authors: Zatul E. Badarudin, Mohamed Ariff, Ahmed M. KhalidAbstract:This article presents results of tests on two related hypotheses on Money Supply. The first relates to an unresolved issue of Money endogeneity while the second centres on the yet-explored relationship between Money Supply and bank stock returns if Money is found to be endogenous. Our results, using long-horizon data of Group of Seven (G-7) economies, supports causality in Money Supply as running from bank lending to bank deposits, a result that is predicted by the post-Keynesian Money Supply endogeneity (bank-credit-driven) Theory. Thus, the result is not consistent with exogeneity proposition. A new evidence of positive relationship between endogenous Money Supply and aggregate bank stock return is statistically significant on this hitherto unexplored topic. These findings are consistent with the post-Keynesian Money Supply Theory and the dividend valuation Theory, which predicts Money Supply changes to induce changes in bank earnings, so bank share prices change.
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Bank Stock Returns under Money Supply Endogeneity: Empirical Evidence Using Panel Data
SSRN Electronic Journal, 2009Co-Authors: Mohamed AriffAbstract:There is as yet a study of Money Supply effect on the aggregate bank stock prices using modern Money Supply theories.Endogenous Money Theory suggests loans made by banks cause deposits, and, consequently, bank creates Money Supply. Resulting changes in bank’s loans and deposits affects bank stock returns: Also, consequent credit creations/reductions affect a bank’s profitability, thus stock prices. Whether Money endogeneity is in fact the way the Money Supply behaves has also not yet been widely tested. Applying panel regression and generalized method of moments, this paper provides new evidence on this little explored relationship between endogenous Money Supply Theory and bank stock returns by testing across several major economies (G-7 countries). We do this by controlling for the actual monetary policy regimes in the economies. The results, while confirming the Money endogeneity as a proposition, also shows significant Money Supply effect on the aggregate prices of banking shares.
Ahmed M. Khalid - One of the best experts on this subject based on the ideXlab platform.
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Post-Keynesian Money endogeneity evidence in G-7 economies
Journal of International Money and Finance, 2013Co-Authors: Zatul E. Badarudin, Mohamed Ariff, Ahmed M. KhalidAbstract:Post-Keynesian Theory of Money endogeneity emphasizes the importance of bank loans causing Money Supply changes. Thus, the proponents of endogenous Money Supply assert banks create Money by meeting Money demands of economic agents. Money is said to originate as bank-created loans from deposits, which in turn create more loans under the endogenous Money Supply. The traditional Money Supply Theory asserts that deposits create Money, so Money is exogenously created. This paper provides new evidence on endogenous Money Supply across G-7 economies over 26 years using quarterly data with controls for monetary regime change effects. Bank loans cause Money Supply, hence Money is endogenous and the monetary regime effect appears to hold as crucial factors in Money Supply Theory. Money Supply behavior is exogenous during two short periods in the UK and the US when monetary targeting policies were in place.
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Money Supply endogeneity and bank stock returns
Applied Financial Economics, 2011Co-Authors: Zatul E. Badarudin, Mohamed Ariff, Ahmed M. KhalidAbstract:This article presents results of tests on two related hypotheses on Money Supply. The first relates to an unresolved issue of Money endogeneity while the second centres on the yet-explored relationship between Money Supply and bank stock returns if Money is found to be endogenous. Our results, using long-horizon data of Group of Seven (G-7) economies, supports causality in Money Supply as running from bank lending to bank deposits, a result that is predicted by the post-Keynesian Money Supply endogeneity (bank-credit-driven) Theory. Thus, the result is not consistent with exogeneity proposition. A new evidence of positive relationship between endogenous Money Supply and aggregate bank stock return is statistically significant on this hitherto unexplored topic. These findings are consistent with the post-Keynesian Money Supply Theory and the dividend valuation Theory, which predicts Money Supply changes to induce changes in bank earnings, so bank share prices change.
Zatul E. Badarudin - One of the best experts on this subject based on the ideXlab platform.
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Post-Keynesian Money endogeneity evidence in G-7 economies
Journal of International Money and Finance, 2013Co-Authors: Zatul E. Badarudin, Mohamed Ariff, Ahmed M. KhalidAbstract:Post-Keynesian Theory of Money endogeneity emphasizes the importance of bank loans causing Money Supply changes. Thus, the proponents of endogenous Money Supply assert banks create Money by meeting Money demands of economic agents. Money is said to originate as bank-created loans from deposits, which in turn create more loans under the endogenous Money Supply. The traditional Money Supply Theory asserts that deposits create Money, so Money is exogenously created. This paper provides new evidence on endogenous Money Supply across G-7 economies over 26 years using quarterly data with controls for monetary regime change effects. Bank loans cause Money Supply, hence Money is endogenous and the monetary regime effect appears to hold as crucial factors in Money Supply Theory. Money Supply behavior is exogenous during two short periods in the UK and the US when monetary targeting policies were in place.
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Money Supply endogeneity and bank stock returns
Applied Financial Economics, 2011Co-Authors: Zatul E. Badarudin, Mohamed Ariff, Ahmed M. KhalidAbstract:This article presents results of tests on two related hypotheses on Money Supply. The first relates to an unresolved issue of Money endogeneity while the second centres on the yet-explored relationship between Money Supply and bank stock returns if Money is found to be endogenous. Our results, using long-horizon data of Group of Seven (G-7) economies, supports causality in Money Supply as running from bank lending to bank deposits, a result that is predicted by the post-Keynesian Money Supply endogeneity (bank-credit-driven) Theory. Thus, the result is not consistent with exogeneity proposition. A new evidence of positive relationship between endogenous Money Supply and aggregate bank stock return is statistically significant on this hitherto unexplored topic. These findings are consistent with the post-Keynesian Money Supply Theory and the dividend valuation Theory, which predicts Money Supply changes to induce changes in bank earnings, so bank share prices change.
Vladimir Burlachkov - One of the best experts on this subject based on the ideXlab platform.
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Money Supply Theory and organization
Voprosy Economiki, 2005Co-Authors: Vladimir BurlachkovAbstract:The effect of Money multiplier is determined by credit activities of the banking system and depends upon the value of the difference between average profitability in the economy and interest rate. The modification of payment systems may lead to decreasing central banks possibilities of Money regulation. Seigniorage which is obtained by the banking system is a kind of economic rent. The effect of Money multiplier reveals itself in the world credit market and influences exchange rate dynamics of reserve currencies. Using government securities as the main asset of central banks and as an instrument of open market operations leads to appreciation of interest rate and to decreasing of credit activities in the economy. A perspective instrument of Money regulation is allocation of central banks deposits with commercial banks.