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Macroeconomic Modeling of Money, Credit, and Banking


  • Iman Anabtawi

    (O'Melveny & Meyers)

  • Gary Smith

    (Pomona College)


A supply-and-demand model of deregulated financial markets is compared to deposit-multiplier models, interest-rate reduced forms, the textbook IS-LM model, and a credit-market approach. This model is used to analyze a variety of financial events that simpler models find paradoxical: some events stimulate the economy while contracting M1; open market purchases need not be multiplied by the banking system to be powerful; business-cycle fluctuationg in tax revenue can have strong effects on financial markets; and increased financial intermediation can be contractionary.

Suggested Citation

  • Iman Anabtawi & Gary Smith, 1994. "Macroeconomic Modeling of Money, Credit, and Banking," Eastern Economic Journal, Eastern Economic Association, vol. 20(3), pages 275-290, Summer.
  • Handle: RePEc:eej:eeconj:v:20:y:1994:i:3:p:275-290

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    Credit; M1; Macroeconomics; Money; Multiplier; Supply;

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers


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