Endogenous money and a liquidity preference theory of asset prices

Article Abstract:

Monetary economists who use the endogenous approach consider the money supply as a function of money demand and reject Keynes' liquidity preference theory. Analyzing the liquidity theory from the viewpoint of interest rates and asset prices and dissecting Keynes' theory of effective demand, it is argued that the endogenous approach and the liquidity theory are not mutually exclusive. In fact, the two theories and the multiplier principle are but three sides to the theory of effective monetary demand and are to be considered as essential to the analysis of the role of money in the economy.

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Some production aspects of an endogenous money-liquidity preference model

Article Abstract:

A simple multi-sector production model is studied in relation to the monetary requirements of various production levels. The model is based on the endogenous money approach and the liquidity preference theory. Industrial circulation is affected by the growth of deposits, which allows for new loans to be made to pay-off old loans. Monetary requirements generally depend on income distribution, the degree of inter-industry vertical integration and intermediate production requirements.

Models

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Profit and demand determined debt

Article Abstract:

The effect of changes in the growth of demand and profitability on credit direction across industries is discussed. Data from 28 US manufacturing industries was used to test whether demand conditions influence short-term borrowing and whether profitability changes determine long-term borrowing. Attempts to integrate the long-run classical approach with short-term Keynesian-style supply-and-demand adjustments into a coherent theory on credit are judged as empirically valid.

Profit, Profits, Debt, Credit

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