Monetary Policy: Non-Volitional and Volitional Saving

Basil John Moore

Chapter 15 in Shaking the Invisible Hand, 2006, pp 331-358 from Palgrave Macmillan

Abstract: Abstract When nonbank agents borrow money from (i.e. sell their own IOUs to) other nonbank units, in exchange for previously accumulated money balances, the money supply does not change. The increase in current spending by borrowing units is roughly offset by the decrease in spending on current output by lending units. When the money supply is constant, there is no accompanying long-run growth in AD, unless the income velocity of money has a positive secular drift. When banks undertake no new net lending, the supply of credit money remains constant. Changes in AD and income reflect primarily changes in the income velocity of money.

Keywords: Exchange Rate; Interest Rate; Monetary Policy; Money Supply; Aggregate Demand (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1057/9780230512139_15

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