The Twin Endogeneities Hypothesis: A Theory of Central Bank Evolution
Daniyal Khan ()
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Daniyal Khan: Department of Economics, New School for Social Research
No 2102, Working Papers from New School for Social Research, Department of Economics
The paper outlines a theory according to which central banking evolves as the result of an interaction between endogenous money and endogenous institutions. This theory is called the twin endogeneities hypothesis and forms the basis for two models which are developed and used to explain two stylized facts of central bank evolution. These models are examples of operationalization of the hypothesis. The first model, combining endogenous money and hysteresis, explains the first stylized fact, namely that there are two different origin tendencies in the history of central banking. The second model is a heuristic model which combines the swings of the Polanyi pendulum (or the Polanyian double movement) with swings in long run central bank independence to explain the latter. These examples serve to demonstrate how the twin endogeneities hypothesis, a theory in the tradition of institutionalist Post Keynesianism, can be used to develop models which help us unpack and address the evolution of central banking from a theoretical point of view.
Keywords: Endogeneity; evolution; money; institutions; central banking (search for similar items in EconPapers)
JEL-codes: B52 E02 E5 (search for similar items in EconPapers)
Pages: 27 pages
New Economics Papers: this item is included in nep-cba, nep-his, nep-hme, nep-mac, nep-mon, nep-ore, nep-pay and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:new:wpaper:2102
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