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Horizontalism: A Critique

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  • Sheila C Dow

Abstract

This article offers a critique of the horizontalist view of money that banks are passive in the face of credit demand. It is argued that banks' liquidity preference influences their responsiveness to the demand for credit. Their liquidity preference is expressed in risk assessment (understood in terms of John Maynard Keynes's theory of uncertainty). It is argued that rationing in the sense of adverse changes in risk assessment occurs systematically in the downturn of the business cycle. Systematic rationing also occurs with respect to particular classes of borrowers; the focus here is on the case of small firms. (c) 1996 Academic Press Limited Copyright 1996 by Oxford University Press.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Sheila C Dow, 1993. "Horizontalism: A Critique," Working Papers Series 93/8, University of Stirling, Division of Economics.
  • Handle: RePEc:stl:stlewp:93/8
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    Cited by:

    1. Duccio Cavalieri, 2004. "On Some Equilibrium and Disequilibrium Theories of Endogenous Money: A Structuralist View," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 12(3), pages 51-83.
    2. James Culham & John E. King, 2013. "Horizontalists and Verticalists after 25 years," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(4), pages 391—405-3, October.
    3. repec:mes:postke:v:23:y:2000:i:2:p:313-329 is not listed on IDEAS
    4. Bill Lucarelli, 2011. "The Economics of Financial Turbulence," Books, Edward Elgar Publishing, number 14252.
    5. Jorg Bibow, 2005. "Liquidity Preference Theory Revisited: To Ditch or to Build on It?," Economics Working Paper Archive wp_427, Levy Economics Institute.
    6. Miglierina Enrico & Molho Elena, 2002. "Well-posedness and convexity in vector optimization," Economics and Quantitative Methods qf0221, Department of Economics, University of Insubria.
    7. Jorg Bibow, 2000. "On exogenous money and bank behaviour: the Pandora's box kept shut in Keynes' theory of liquidity preference?," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 7(4), pages 532-568.
    8. Cavalieri, Duccio, 2015. "On stock-flow consistent approaches and the like: the ‘rediscovery’ of model building," MPRA Paper 67050, University Library of Munich, Germany, revised 02 Oct 2015.
    9. Kevin S. Nell, 2000. "The Endogenous/Exogenous Nature of South Africa’s Money Supply Under Direct and Indirect Monetary Control Measures," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 23(2), pages 313-329, December.

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