The logic of endogenous money supply

Author: Sun Boyin
Publisher:
Publish Date: 2003-07-01
Features: The endogeneity and exogeneity of money supply is an old and new issue in economics, and the controversies it has generated have almost spanned the entire history of monetary development and evolution. This issue remains controversial and highly debated for two main reasons. On one hand, it is indeed complex, as monetary systems are constantly changing, and there is a significant gap between theory and practice. On the other hand, it is critically important, directly affecting what governments can and cannot do, how policies are formulated, their effectiveness, and their impact on economic activity. The endogeneity and exogeneity of money supply is a fundamental theoretical issue in economics. This book conducts an in-depth and systematic study of it from theoretical, empirical, and policy perspectives. Theoretically, the author constructs a framework for endogenous money theory, critiques exogenous money theory and the money multiplier view, and proposes the concepts of endogenous money and the money divisor. Empirically, the author proposes and analyzes the political endogeneity and market endogeneity characteristics of China's money supply, conducting econometric tests. Policy-wise, the author reinterprets Keynes's liquidity trap theory and offers policy recommendations for combating and preventing deflation and inflation. This book is suitable for theoretical researchers and practitioners to read and reference.