Currency (im)properties

Fernando Nogueira da Costa ()

Brazilian Journal of Political Economy, 1993, vol. 13, issue 2, 232-247

Abstract: Keynes assumed inelasticity of supply (or inelasticity of production) with respectto demand as a necessary attribute of money. But the post-Keynesian theory of moneysuggests that the money supply function should be viewed as horizontal, at a level of interestrates established by the central bank in setting the supply price of reserves. Interest ratesrather than the money supply are the central bank’s true exogenous control variable. Themoney supply is endogenous, credit-driven and demand-determined. This paper examineswhy the later theory surpass Keynes’s theory of money. JEL Classification: E52; E12.

Keywords: Money supply; post-Keynesianism (search for similar items in EconPapers)
Date: 1993
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