Interactions between Money, Lending and Investment in the UK Private Non‐Financial Corporate Sector

Andrew Brigden and Paul Mizen

Manchester School, 2004, vol. 72, issue 1, 72-99

Abstract: In this paper we consider the additional information to be derived from modelling lending, investment and money in a jointly determined system of equations. We allow demand‐ and supply‐side effects to influence the money, investment and lending equations. Using UK corporate data, we find acceptable equilibrium equations for investment, lending and money with a causal chain running from money and lending to investment and money to lending in a dynamic model. There is clear support for ‘value added’ from a lending equation and support for interactions between financial variables and real economic activity.

Date: 2004
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https://doi.org/10.1111/j.1467-9957.2004.00381.x

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