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The nature and role of monetary policy when money is endogenous

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  • Philip Arestis
  • Malcolm Sawyer

Abstract

This paper considers the nature and role of monetary policy when money is modelled as credit money endogenously created within the private sector. There are currently two schools of thought that view money as endogenous: one has been labelled the 'new consensus' in macroeconomics, and the other is the Keynesian endogenous (bank) money approach. The paper first explores the analysis of monetary policy in the 'new consensus' macroeconomic model, followed by an examination of the effectiveness of monetary policy in that analysis. The Keynesian view of endogenous money is discussed, and the role for monetary policy in a Keynesian endogenous monetary policy analysis is considered, including discussion of the objectives and instruments of monetary policy. Copyright 2006, Oxford University Press.

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Bibliographic Info

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

Volume (Year): 30 (2006)
Issue (Month): 6 (November)
Pages: 847-860

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Handle: RePEc:oup:cambje:v:30:y:2006:i:6:p:847-860

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Cited by:
  1. Philip Arestis & Malcolm Sawyer, 2003. "Macroeconomic Policies of the Economic and Monetary Union: Theorectical Underpinnings and Challenges," Macroeconomics, EconWPA 0308008, EconWPA.
  2. Jan Korda, 2010. "A Comparison of New Consensus as a Theoretical Framework of Inflation Targeting with Post-Keynesian Economics," Politická ekonomie, University of Economics, Prague, University of Economics, Prague, vol. 2010(1), pages 92-104.
  3. Andrea Teglio & Marco Raberto & Silvano Cincotti, 2011. "The impact of banks’ capital adequacy regulation on the economic system: an agent-based approach," Working Papers 2011/01, Economics Department, Universitat Jaume I, Castellón (Spain).
  4. Raberto, Marco & Teglio, Andrea & Cincotti, Silvano, 2012. "Debt, deleveraging and business cycles: An agent-based perspective," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 6(27), pages 1-49.
  5. Philip Arestis & Malcolm Sawyer, 2002. "Does The Stock of Money Have Any Causal Significance," Economics Working Paper Archive wp_363, Levy Economics Institute.
  6. Eckhard Hein & Achim Truger, 2008. "Fiscal policy in the macroeconomic policy mix: A Critique of the New Consensus Model and a comparison of macroeconomic policies in France, Germany, the UK and Sweden from a Post-Keynesian perspective," IMK Working Paper 03-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  7. Robert Pollin & James Heintz, 2013. "Study of U.S. Financial System," FESSUD studies, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project fstudy10, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
  8. Hein, Eckhard & Schoder, Christian, 2009. "Interest rates, distribution and capital accumulation – A Post-Kaleckian perspective on the US and Germany," MPRA Paper 18223, University Library of Munich, Germany.
  9. Giuseppe Fontana, 2006. "The "New Consensus" View of Monetary Policy: A New Wicksellian Connection?," Economics Working Paper Archive wp_476, Levy Economics Institute.
  10. Cavalieri, Duccio, 2004. "On Some Equilibrium and Disequilibrium Theories of Endogenous Money: A Structuralist View," MPRA Paper 43738, University Library of Munich, Germany.
  11. Olivier Allain, 2006. "La modération salariale : le point de vue des (néo-)kaleckiens," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00196500, HAL.
  12. M. Lopreite, 2012. "The endogenous money hypothesis and securitization: the Euro area case (1999-2010)," Economics Department Working Papers 2012-EP02, Department of Economics, Parma University (Italy).
  13. Greg Hannsgen, 2004. "The Transmission Mechanism of Monetary Policy: A Critical Review," Macroeconomics, EconWPA 0411004, EconWPA.
  14. repec:hal:journl:halshs-00196500 is not listed on IDEAS
  15. Alfonso Palacio-Vera, 2008. "Money wage rigidity, monopoly power and hysteresis," Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales 08-02, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.

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