publication . Article . 2012

EXOGENOUS OR ENDOGENOUS MONEY SUPPLY: EVIDENCE FROM AUSTRALIA

Zatul E. Badarudin; Ahmed M. Khalid; Mohamed Ariff;
Open Access
  • Published: 01 Jan 2012 Journal: The Singapore Economic Review, volume 57, page 1,250,025 (issn: 0217-5908, eissn: 1793-6837, Copyright policy)
  • Publisher: World Scientific Pub Co Pte Lt
Abstract
<jats:p> This paper investigates the nature of money supply in Australia over two separate monetary policy regimes: monetary and inflation targeting. The post-Keynesian theory on endogenous money was tested with the aim of investigating whether endogenous money supply, if it did exist, followed the accomodationist, structuralist or liquidity preference viewpoints. Data used are quarterly series from 1977 to 2007 and we used vector error-correction model for long-run and short-run causality tests. We found that money supply is endogenous in Australia even when the central bank targeted monetary aggregates during the period 1977 to 1993. </jats:p>
Persistent Identifiers
Subjects
free text keywords: Economics and Econometrics, Post-Keynesian, endogenous money supply, vector error-correction model, E12, E51, Macroeconomics, Central bank, Monetary economics, Economics, Money supply, Inflation targeting, Monetary policy, Post-Keynesian economics, Causality, Endogenous money, Liquidity preference
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