 What is Endogenous when Monetary Policy is Transparent?Peter Howells Chapter 3 in Aspects of Modern Monetary and Macroeconomic Policies, 2007, pp 27-42 from Palgrave Macmillan Abstract: Abstract In the conventional Post Keynesian account of money supply determination (and the conduct of monetary policy), it is the rate of interest set by the central bank that is exogenously determined while the quantity of money is determined by the demand for bank loans, which in turn is dependent on the ‘state of trade’. Over the years, this simple statement of what Fontana calls ‘one of the main cornerstones of Post Keynesian economics’ (Fontana 2003: 291) has generated a certain amount of debate and subsequent refinement. Controversial issues have included (i) the role of the demand for money; (ii) the precise range of expenditures bearing upon the demand for credit; (iii) the importance of banks’ liquidity preference; and (iv) the extent to which central banks themselves contribute to endogeneity by passively supplying reserves. Palley’s recent comment that ‘For the last decade, the post-Keynesian approach to endogenous money has become bogged down in a debate between what have been called the ‘accommodationist’ and ‘structuralist’ approaches’ (Palley 2002: 152) is a reference to (iii) and (iv). Keywords: Interest Rate; Monetary Policy; Federal Reserve; Money Supply; Real Interest Rate (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-62734-5_3 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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