Abstract
In the discussion on monetary economics in general and the supply of money in an economy in particular, one cannot avoid mentioning one major concept, i.e. the money supply endogeneity. Money supply is said to be endogenous or endogenously determined if money creation occurs within the monetary system of an economy – rather than being determined by external forces. The theory of endogenous money represents the foundation of post-Keynesian monetary theory. Money supply endogeneity implies that central banks do not exogenously determine the quantity of credit money in existence; it is the interest rate that they can control exogenously. The present paper examines the money supply endogeneity based on a panel data set of 174 countries from year 2001 to 2011 utilising the dynamic panel data analysis and has found that money supply is endogenous as proposed by post-Keynesian theorists.
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Notes
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By construction, the differenced error term is probably serially correlated at first order even if the original error is not. While most studies that employ GMM dynamic estimation report the test for first-order serial correlation, some do not.
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Nayan, S., Kadir, N., Yusof, A.H., Ali, N.A.M. (2016). Money Supply Endogeneity: Evidence from the Dynamic Panel Data. In: Mohd Sidek, N., Ali, S., Ismail, M. (eds) Proceedings of the ASEAN Entrepreneurship Conference 2014. Springer, Singapore. https://doi.org/10.1007/978-981-10-0036-2_21
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