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2007•Palgrave Macmillan UK eBooksRequires access

The Dynamic Analysis of Monetary Policy Shock on Banking Behaviour

Edwin Le Héron

Open publisher page 3 citations

Abstract

In Keynes’s General Theory , the ‘monetary authorities’ are considered to act as a deus ex machina: they should resolve all the problems regarding the creation and control of money. The banking system and financial institutions are analysed solely in terms of central bank activities. 1 The supply of money is fixed exogenously by the central bank. An endogenous theory of the demand for money co-exists with an endogenous theory of the interest rate (liquidity preference). 2 These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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What this paper is about

In Keynes’s General Theory , the ‘monetary authorities’ are considered to act as a deus ex machina: they should resolve all the problems regarding the creation and control of money. The banking system and financial institutions are analysed solely in terms of central bank activities. 1 The supply of money is fixed exogenously by the central bank. An endogenous theory of the demand for money co-exists with an endogenous theory of the interest rate (liquidity preference). 2 These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Available abstract

In Keynes’s General Theory , the ‘monetary authorities’ are considered to act as a deus ex machina: they should resolve all the problems regarding the creation and control of money. The banking system and financial institutions are analysed solely in terms of central bank activities. 1 The supply of money is fixed exogenously by the central bank. An endogenous theory of the demand for money co-exists with an endogenous theory of the interest rate (liquidity preference). 2 These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Key concepts: Liquidity preference, Monetary economics, Economics, Endogenous money, Money supply, Market liquidity, Monetary policy, Shock (circulatory)

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