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Endogenous currency and monetary theory of production

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  • Antonio José Meirelles

Abstract

The aim of this paper is to examine the compatibility of Keynes’ monetary productiontheory with the “horizontalist” approach to the determination of the interest ratesand the money supply. According to Moore the short-term interest rates are exogenouslydetermined by central banks, so that the portfolio approach to its determination, based onthe liquidity preference theory, is incorrect. Keynes’ theory, on the other hand, emphasizesthe nature of money as an asset, whose interest rate, endogenously determined by liquiditypreference, will set the limit to the marginal efficiency of other assets. This essay suggeststhat the “horizontalist” approach is not compatible with Keynes’s view on “money as a ‘real’factor”. JEL Classification: B50; E12.

Suggested Citation

  • Antonio José Meirelles, 1995. "Endogenous currency and monetary theory of production," Brazilian Journal of Political Economy, Center of Political Economy, vol. 15(3), pages 311-324.
    • Handle: RePEc:ekm:repojs:v:15:y:1995:i:3:p:311-324:id:1245
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/1245/1230
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    More about this item

    Keywords

    Money supply; interest rate determinantion`; post-keynesianism; endogenous money;
    All these keywords.

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory

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