Journal of Finance and Economics

Journal of Finance and Economics

ISSN: 2291-4951 (Print)    ISSN: 2291-496X (Online)

Volume 3 (2015), No. 4, Pages 1-10

DOI: 10.12735/jfe.v3i4p01

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Post Keynesian Theory and Evidence of Money Supply Endogeneity: A Review Essay

Sabri Nayan1  Norsiah Kadir2  Abdul Hafiz Yusof3  Noor Azillah Mohamad Ali3 

1School of Economics, Finance and Banking (SEFB), College of Business (COB), Universiti Utara Malaysia, Malaysia
2Department of Economics, Faculty of Business Management, Universiti Teknologi Mara Malaysia
3Department of Finance, Faculty of Business Management, University Teknologi Mara Malaysia


To Cite this Article     Article Views: 1126     Downloads: 605  Since deposited on 2015-11-15


Money is the life-blood of any modern market-oriented economy. The level of money supply - the quantity and velocity of money circulated in such an economy would determine its health. The central issue in managing the economy is to understand how money supply is determined. The history of modern monetary economics actually has witnessed the emergence of two opposing views pertaining to the role of central bank in controlling the supply of money in an economy. A group of economists, known as monetarists, under the influence of Milton Friedman, contended that money supply in an economy is exogenously determined. Post Keynesian however holds the view that money supply is endogenously rather than exogenously determined. Examining the theory of endogenous money as well as empirical work, the present paper has found that money supply in several countries is endogenously determined.

JEL Classifications: E44, E52, E58

Keywords: endogenous, exogenous, horizontalist, Post Keynesian theory, structuralist

To Cite this Article: Nayan, S., Kadir, N., Yusof, A. H., & Ali, N. A. M. (2015). Post Keynesian theory and evidence of money supply endogeneity: A review essay. Journal of Finance and Economics, 3(4), 1-10.

Copyright © Sabri Nayan et al.

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This article is published under license to Science and Education Centre of North America. This is an Open Access article distributed under the terms of the Creative Commons Attribution 4.0 International License.

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Post Keynesian Theory and Evidence of Money Supply Endogeneity: A Review Essay