A POST‐KEYNESIAN STOCK‐FLOW CONSISTENT MODEL FOR DYNAMIC ANALYSIS OF MONETARY POLICY SHOCK ON BANKING BEHAVIOUR

Edwin Le Heron and Tarik Mouakil

Metroeconomica, 2008, vol. 59, issue 3, 405-440

Abstract: We try to make Keynes' approach compatible with an endogenous theory of the money supply. For that purpose, the principle of liquidity preference is generalized within a competitive banking framework. Private banks can impose a monetary rationing independently of the central bank. Then, we analyse the consequences of a monetary policy shock on the financial behaviour of banks. We clarify the dynamic process between the monetary policy and net investment within a Minskyan approach. First, we build a Post‐Keynesian stock‐flow consistent model with a private‐bank sector introducing more realistic features. Second, we perform some simulations.

Date: 2008
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https://doi.org/10.1111/j.1467-999X.2008.00313.x

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Working Paper: A Post-Keynesian Stock-Flow Consistent Model for Dynamic Analysis of Monetary Policy Shock on Banking behaviour (2008)
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