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Theoretical Reflections on Endogenous Money: The Problem with 'Convenience Lending.'

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Author Info
Arestis, Philip
Howells, Peter

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Abstract

This paper questions the practice of representing the endogenous money supply by means of a 'horizontal' money supply curve, implicitly contrasted with the conventional 'vertical' (stock) supply curve. What is drawn as a horizontal curve is strictly a locus between a continually shifting stock curve and a shifting demand curve. Consequently, demand (for money) considerations have been suppressed in the 'horizontal' presentation. One response is that the resulting deposits are automatically held, through some process such as 'convenience lending'. However, the argument behind 'convenience lending' points to the conclusion that it is changes in relative interest rates that reconcile the demand for additional loans with the demand for additional deposits. (c) 1996 Academic Press Limited Copyright 1996 by Oxford University Press.

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Publisher Info
Article provided by Oxford University Press in its journal Cambridge Journal of Economics.

Volume (Year): 20 (1996)
Issue (Month): 5 (September)
Pages: 539-51
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Handle: RePEc:oup:cambje:v:20:y:1996:i:5:p:539-51

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  2. Peter Howells & Iris Biefang-Frisancho Mariscal, 2005. "Monetary Policy Regimes: a fragile consensus," Discussion Papers 0512, University of the West of England, Department of Economics. [Downloadable!]
  3. Joerg Bibow, 2005. "Liquidity Preference Theory Revisited—To Ditch or to Build on It?," Method and Hist of Econ Thought 0508003, EconWPA. [Downloadable!]
  4. Joerg Bibow, 2005. "Liquidity Preference Theory Revisited: To Ditch or to Build on It?," Economics Working Paper Archive wp_427, Levy Economics Institute, The. [Downloadable!]
  5. Kevin S. Nell, 1999. "The Endogenous/Exogenous Nature of South Africa's Money Supply Under Direct and Indirect Monetary Control Measures," Studies in Economics 9912, Department of Economics, University of Kent. [Downloadable!]
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  7. Bertocco Giancarlo, 2003. "The characteristics of a monetary economy: a Keynes-Schumpeter approach," Economics and Quantitative Methods qf0311, Department of Economics, University of Insubria. [Downloadable!]
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  8. Philip Arestis & Malcolm Sawyer, 1998. "Reassuring the Role of Keynesian Policies for the New Millenium," Macroeconomics 9801004, EconWPA. [Downloadable!]
  9. Bertocco Giancarlo, 2006. "Some observations about the endogenous money theory," Economics and Quantitative Methods qf0602, Department of Economics, University of Insubria. [Downloadable!]
  10. Miglierina Enrico & Molho Elena, 2002. "Well-posedness and convexity in vector optimization," Economics and Quantitative Methods qf0221, Department of Economics, University of Insubria. [Downloadable!]
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  13. Malcolm Sawyer, 1998. "The Kaleckian Analysis and the New Mellinium," Macroeconomics 9805001, EconWPA, revised 01 Sep 1998. [Downloadable!]
  14. Man-Seop Park, 2004. "Credit money and Kaldor's 'institutional' theory of income distribution," Review of Political Economy, Taylor and Francis Journals, vol. 16(1), pages 79-99, January. [Downloadable!] (restricted)
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