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A Post-Keynesian Stock-Flow Consistent Model for Dynamic Analysis of Monetary Policy Shock on Banking behaviour

Author

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  • Edwin Le Héron

    (SPIRIT - Science Politique Relations Internationales Territoire - Université Montesquieu - Bordeaux 4 - Institut d'Études Politiques [IEP] - Bordeaux - CNRS - Centre National de la Recherche Scientifique)

  • Tarik Mouakil

Abstract

We try to make Keynes' approach compatible with an endogenous theory of the money supply. For that purpose, the principle of liquidity preference is generalized within a competitive banking framework. Private banks can impose a monetary rationing independently of the central bank. Then, we analyse the consequences of a monetary policy shock on the financial behaviour of banks. We clarify the dynamic process between the monetary policy and net investment within a Minskyan approach. First, we build a Post‐Keynesian stock‐flow consistent model with a private‐bank sector introducing more realistic features. Second, we perform some simulations.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Edwin Le Héron & Tarik Mouakil, 2008. "A Post-Keynesian Stock-Flow Consistent Model for Dynamic Analysis of Monetary Policy Shock on Banking behaviour," Post-Print halshs-00326500, HAL.
    • Handle: RePEc:hal:journl:halshs-00326500
    DOI: 10.1111/j.1467-999X.2008.00313.x
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    References listed on IDEAS

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    1. Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
    2. Edwin Le Heron, 2007. "The Dynamic Analysis of Monetary Policy Shock on Banking Behaviour," Palgrave Macmillan Books, in: John McCombie & Carlos Rodríguez González (ed.), Issues in Finance and Monetary Policy, chapter 5, pages 73-99, Palgrave Macmillan.
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    6. Bennett T. McCallum, 2001. "Monetary policy analysis in models without money," Review, Federal Reserve Bank of St. Louis, vol. 83(Jul), pages 145-164.
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