Monetary Policy Implementation in the Eurozone - the Concept of Endogenous Money

Svatopluk Kapounek

No 2011-12, MENDELU Working Papers in Business and Economics from Mendel University in Brno, Faculty of Business and Economics

Abstract: The author focuses on the current problems of the common monetary policy implementation in the Eurozone in context of output stabilization function. The author focuses on the money demand function stability and its estimation. The stable money demand function ensures that the money supply would have predictable impact on the macroeconomic variables such as inflation and real economic growth. The instability is described by Poskeynesians' assumptions of money endogeneity. Although central banks may have certain control over the money supply, they cannot fix the stock of money in a country. According to the Postkeynesians' assumptions, the enterprises do not need ex ante stock of savings in order to carry out investment decisions. The causality is directed from economic activity to money demand. Interaction between the money demand and supply is arranged by multiplier effect of deposits.

Keywords: monetary transmission mechanism; money endogeneity; European integration process; Post- Keynesian economics (search for similar items in EconPapers)
JEL-codes: E5 (search for similar items in EconPapers)
Pages: 21
Date: 2011-10
New Economics Papers: this item is included in nep-cba, nep-cwa, nep-eec, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:men:wpaper:12_2011

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