Exogenous or endogenous money supply: Evidence from Australia

Zatul E. Badarudin*, Ahmed M. Khalid, Mohamed Ariff

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

7 Citations (Scopus)


This paper investigates the nature of money supply in Australia over two separate monetary policy regimes: monetary and inflation targeting. The post-Keynesian theory on endogenous money was tested with the aim of investigating whether endogenous money supply, if it did exist, followed the accomodationist, structuralist or liquidity preference viewpoints. Data used are quarterly series from 1977 to 2007 and we used vector error-correction model for long-run and short-run causality tests. We found that money supply is endogenous in Australia even when the central bank targeted monetary aggregates during the period 1977 to 1993.

Original languageEnglish
Article number1250025
JournalSingapore Economic Review
Issue number4
Publication statusPublished - Dec 2012


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