Exogenous or endogenous money supply: Evidence from Australia

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

Research output: Contribution to journalArticleResearchpeer-review

4 Citations (Scopus)

Abstract

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
Volume57
Issue number4
DOIs
Publication statusPublished - Dec 2012

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Money supply
Endogenous money
Central bank
Monetary policy regimes
Vector error correction model
Monetary targeting
Monetary aggregates
Liquidity preference
Causality test
Short-run
Inflation targeting
Post Keynesian theory

Cite this

Badarudin, Zatul E. ; Khalid, Ahmed M. ; Ariff, Mohamed. / Exogenous or endogenous money supply : Evidence from Australia. In: Singapore Economic Review. 2012 ; Vol. 57, No. 4.
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Exogenous or endogenous money supply : Evidence from Australia. / Badarudin, Zatul E.; Khalid, Ahmed M.; Ariff, Mohamed.

In: Singapore Economic Review, Vol. 57, No. 4, 1250025, 12.2012.

Research output: Contribution to journalArticleResearchpeer-review

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