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The Survey of Exogenous and Endogenous nature of Liquidity in Iran economy

Author

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  • Bagherpur Oskouie, Elnaz

    (Ph.D. Candidate in Economics, University of Allameh Tabataba'i)

  • Shakeri, Abbas

    (professor of Economics, University of Allameh Tabataba'i)

Abstract

The main purpose of this study is to increase the understanding of the mechanism of creating liquidity in Iran economy using quarterly data during the years 1983: 2 to 2020: 3 through empirical evaluation of the two main monetary theories endogenous money theory, Post-Keynesian theory, and exogenous money theory, monetarist. Granger causality and co-accumulation tests have been used in most experimental studies to diagnose the endogenous and exogenous nature of liquidity, but due to some limitations of the co-accumulation model, Christoph and Cyril (2020) suggest an alternative test based on the concept of endogenous econometrics. Therefore, in order to compare and identify the nature of liquidity in the Iranian economy, first the model in the present study is based on the co-integration test and then according to the mentioned limitations, the instrumental regression method is used. Empirical evidence confirms the endogenous of liquidity in the period 1983: 2 to 2020:4 (before the privatization of banks), but between the years 2001: 1 to 2020: 3 the results indicate that 1) The nature of liquidity in this period is endogenous, and 2) the views of structuralists and the endogenous liquidity preferences of post-Keynesian money are endorsed. Accordingly, the endogenous of liquidity in the period 2001: 1 to 2020: 3 shows that in addition to the central bank, banks also have the ability to create and create liquidity in the economy

Suggested Citation

  • Bagherpur Oskouie, Elnaz & Shakeri, Abbas, 2022. "The Survey of Exogenous and Endogenous nature of Liquidity in Iran economy," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 8(4), pages 127-160, March.
    • Handle: RePEc:ris:qjatoe:0250
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    More about this item

    Keywords

    Endogenous money supply; Exogenous money supply; Banks; Central banks;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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