Endogenous interest rate with accommodative money supply and liquidity preference - HAL-SHS - Sciences de l'Homme et de la Société
Pré-Publication, Document De Travail Année : 2015

Endogenous interest rate with accommodative money supply and liquidity preference

Résumé

The paper offers theoretical discussion and modelling showing that -in accordance to the post Keynesian approach to endogenous money- the credit-worthy demand for loans determines the supply of loans at the prevailing interest rate, while -in accordance with Keynes's liquidity preference theory- the rate of interest is endogenously determined as to equalize the demand and supply of liquidity-money in terms of stocks. As a consequence, the markup reflected in the spread between the central bank refinancing interest rate and the market interest rate is endogenously determined by the total demand and supply of liquidity-money. The paper also argues that, while the central bank effectively controls the base interest rate, additional conditions are required to control the liquidity-money market interest rate, owing to the conventional nature of the rate of interest Keynes pointed out.
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Dates et versions

halshs-01231469 , version 1 (20-11-2015)
halshs-01231469 , version 2 (08-03-2019)

Identifiants

  • HAL Id : halshs-01231469 , version 1

Citer

Angel Asensio. Endogenous interest rate with accommodative money supply and liquidity preference. 2015. ⟨halshs-01231469v1⟩
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