The markets for money and credit in an open economy
In this chapter we will develop a Brunner-Meltzer type of model to explain the demand for and supply of money and credit1. The model guides our empirical investigations of the money and credit markets in the Netherlands. In section 2.1 of this chapter, we will present the economy’s balance sheets. In section 2.2, we will formulate the proximate determinants of the supply of money and credit. In section 2.3, we will discuss the ultimate determinants of money and credit demand and supply. In section 2.4, we will discuss briefly the implications of the relative sensitivity of money and credit with respect to interest rates and capital prices for the effectiveness of monetary policies.
KeywordsInterest Rate Central Bank Banking System Physical Capital Credit Market
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