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Title:Endogenous money: on banking behaviour in new and post Keynesian models PDF Logo
Authors:Georg, Co-Pierre
Pasche, Markus
Issue Date:2008
Series/Report no.:Jena economic research papers 2008,065
Abstract:In New Keynesian as well as in Post Keynesian macroeconomic models, money supply is assumed to be endogenous. The reasons for the endogeneity and the role of the financial sector in the supply process, however, are seen very different. In this paper we explicitly derive the behaviour of the banking sector regarding the supply of loans and the demand for reserves from portfolio and liquidity considerations. As a result, the money multiplier as well as the money base are endogenously determined. Although the microeconomics of the bank behaviour is quite simple, credit and money as well as bonds demand depend on policy variables in a non-linear and non-monotonous way.
Subjects:Endogenous money
loans market
bonds market
central banking
JEL:E51
E44
B22
Document Type:Working Paper
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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