Post‐Keynesian endogenous money theory: Horizontalists, structuralists and the paradox of illiquidity
Matteo Deleidi ()
Metroeconomica, 2020, vol. 71, issue 1, 156-175
The paper aims to provide a theoretical advancement in the post‐Keynesian debate between horizontalists and structuralists by offering an additional theoretical support to the horizontalist view. Through the newly introduced notion of paradox of illiquidity, a critique to the endogenous money–liquidity preference model is developed, by focusing on the relationship between the volume of loans and the mark‐up. The paradox of illiquidity aims to deny: (a) the idea of a banking sector achieving illiquid position during its lending activities and, consequently, (b) the view of an upward sloping credit supply curve.
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Persistent link: https://EconPapers.repec.org/RePEc:bla:metroe:v:71:y:2020:i:1:p:156-175
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