Two theories of endogenous money: an empirical study of Korea

Wonik Park

Journal of Post Keynesian Economics, 2023, vol. 46, issue 2, 303-333

Abstract: This study tests Korea’s two endogenous money supply channels: the accommodationist and structuralist channels. The main analytic tools are the Fully Modified OLS, Maki’s structural break test, Error Correction Model, and Impulse Response Function (IRF) analysis. The primary purpose of this study is to propose analytical methods to compare the two endogenous money supply channels. The analytic models also consider the impact of fiscal policy and the current account balance on reserves. The test results reveal a unilateral causality from loan to reserve and a bilateral causal relationship between loan/reserve and Lf/deposit ratio. These results suggest that both accommodationist and structuralist channels coexist in Korea. However, the structuralist channel explains a relatively small portion of the endogenous money supply process. The IRF analysis does not provide evidence for the pressure on the interest rate spread exerted by financial institutions’ portfolio adjustment. This result can be attributed mainly to the central bank’s growing accommodative attitude toward the reserve demand.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/01603477.2023.2170248 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:postke:v:46:y:2023:i:2:p:303-333

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MPKE20

DOI: 10.1080/01603477.2023.2170248

Access Statistics for this article

More articles in Journal of Post Keynesian Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().