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Post Keynesian Endogeneity of Money Supply: Panel Evidence

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  • Nayan, Sabri
  • Ahmad, Mahyudin
  • Kadir, Norsiah
  • Abdullah, Mat Saad

Abstract

Post Keynesian economics is actually macroeconomics in a world of uncertainty and endogenous money. Post Keynesians posit that money supply in a market oriented production economy is endogenous or endogenously determined (rather than exogenous as claimed by Monetarists). Money supply is said to be endogenous if it is determined within the economic system itself. The present paper investigates this theory using a panel dataset of 177 countries from year 1970-2011 utilising dynamic panel data analysis and has found that money supply is endogenous as proposed by Post Keynesian theorists.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 48716.

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Date of creation: 30 Jul 2013
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Handle: RePEc:pra:mprapa:48716

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Keywords: Post-Keynesians; Endogeneity; Panel Data Analysis; System GMM.;

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  1. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  2. Cifter, Atilla & Ozun, Alper, 2007. "Monetary Transmission Mechanism in the New Economy: Evidence from Turkey (1997-2006)," MPRA Paper 2486, University Library of Munich, Germany.
  3. Louis-Philippe Rochon, 2001. "Cambridge's Contribution to Endogenous Money: Robinson and Kahn on credit and money," Review of Political Economy, Taylor & Francis Journals, vol. 13(3), pages 287-307.
  4. Marc Lavoie, 2005. "Monetary base endogeneity and the new procedures of the asset-based Canadian and American monetary systems," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 27(4), pages 689-709, July.
  5. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  6. Vymyatnina, Yulia, 2006. "How much control does Bank of Russia have over money supply?," Research in International Business and Finance, Elsevier, vol. 20(2), pages 131-144, June.
  7. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  8. Nina Shapiro, 2005. "Competition and aggregate demand," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 27(3), pages 541-549, April.
  9. Basil J. Moore, 1983. "Unpacking the Post Keynesian Black Box: Bank Lending and the Money Supply," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 5(4), pages 537-556, July.
  10. Thomas I. Palley, 1992. "Money, Credit, and Prices in a Kaldorian Macro Model," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 14(2), pages 183-203, January.
  11. Basil J. Moore, 1988. "The Endogenous Money Supply," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 10(3), pages 372-385, April.
  12. Robert Pollin, 1991. "Two Theories of Money Supply Endogeneity: Some Empirical Evidence," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 13(3), pages 366-396, April.
  13. Alonso-Borrego, Cesar & Arellano, Manuel, 1999. "Symmetrically Normalized Instrumental-Variable Estimation Using Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(1), pages 36-49, January.
  14. Paul Davidson, 1978. "Why Money Matters: Lessons from a Half-Century of Monetary Theory," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 1(1), pages 46-70, October.
  15. Cifter Atilla & Ozun Alper, 2007. "The Monetary Transmission Mechanism in the New Economy: Evidence from Turkey (1997-2006)," South East European Journal of Economics and Business, De Gruyter Open, vol. 2(1), pages 15-24, April.
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