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Money supply. Endogenous or exogenous variable? With reference to Iraq

Journal: Banks and bank systems [electronic resource] (Vol.12, No. 4)

Publication Date:

Authors : ; ;

Page : 144-153

Keywords : accommodationists policy; endogenous money; post-Keynesian economics; structuralists monetary policy in Iraq;

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The issue of whether money supply is a dependent or an independent variable remains a debating one, especially with the ongoing development and innovation of institutions, tools, and financial, monetary, and banking derivatives. In general, we can say that there are two trends of thought about the issue under consideration. The first trend views money supply as an exogenous variable because the monetary authority can control and monitor it. The second one views money supply as an endogenous variable because Federal Bank has no ability to affect it, especially when nominal or money income is changed and reflected on money multiplier and money supply, and also when the monetary authority cannot restrict the monetary expansion as a result of different factors related to the economy structure or related to other non-economic factors.

Last modified: 2018-03-15 18:39:22