Book contents
- Frontmatter
- Contents
- List of figures
- Preface and acknowledgements
- 1 Introduction: why post-Keynesian economics and who were its Cambridge pioneers?
- 2 Post-Keynesian macroeconomic theories of distribution
- 3 Post-Keynesian theories of the determination of the mark-up
- 4 Macroeconomic theories of accumulation
- 5 Money and finance: exogenous or endogenous?
- 6 The complete model: its role in an explanation of post-war inflationary episodes
- 7 Theories of growth: from Adam Smith to ‘modern’ endogenous growth theory
- 8 Applications to policy
- Appendix 1 Biographical sketches of the pioneers: Keynes, Kalecki, Sraffa, Joan Robinson, Kahn, Kaldor
- Appendix 2 The conceptual core of the post-Keynesian discontent with orthodox theories of value, distribution and growth
- Bibliography
- Index
5 - Money and finance: exogenous or endogenous?
Published online by Cambridge University Press: 22 September 2009
- Frontmatter
- Contents
- List of figures
- Preface and acknowledgements
- 1 Introduction: why post-Keynesian economics and who were its Cambridge pioneers?
- 2 Post-Keynesian macroeconomic theories of distribution
- 3 Post-Keynesian theories of the determination of the mark-up
- 4 Macroeconomic theories of accumulation
- 5 Money and finance: exogenous or endogenous?
- 6 The complete model: its role in an explanation of post-war inflationary episodes
- 7 Theories of growth: from Adam Smith to ‘modern’ endogenous growth theory
- 8 Applications to policy
- Appendix 1 Biographical sketches of the pioneers: Keynes, Kalecki, Sraffa, Joan Robinson, Kahn, Kaldor
- Appendix 2 The conceptual core of the post-Keynesian discontent with orthodox theories of value, distribution and growth
- Bibliography
- Index
Summary
In 1974, Jim Cairns, my former teacher at the University of Melbourne who at the time was Treasurer in the Whitlam ALP government, asked me to be Governor of Australia's central bank (the Reserve Bank of Australia). I replied: ‘You know me, Jim, I'm a real man not a money man, so thanks but no thanks.’
So in my lectures I usually mentioned money and finance only in passing. Hence this is a short chapter; it concentrates on whether the money supply may or should be regarded as exogenous or endogenous.
My own view is that it is mainly, but certainly not completely, endogenous. I take as my authority Keynes himself, who for virtually all of his professional life was overwhelmingly an endogenous money person. As a follower of Marshall, he understood the role of mutual determination; but also, as Luigi Pasinetti has pointed out (see Pasinetti 1974, 44), Keynes also argued most strongly (and led by example):
that it is one of the tasks of the economic theorist … to specify which variables are sufficiently interdependent as to be best represented by simultaneous relations, and which variables exhibit such an overwhelming dependence in one direction (and such a small dependence in the opposite direction) as to be best represented by one–way–direction relations.
Immediately, the apparent exception of The General Theory surely comes to mind. Sheila Dow (1997) has provided a convincing explanation of why this is not so.
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- Chapter
- Information
- The Structure of Post-Keynesian EconomicsThe Core Contributions of the Pioneers, pp. 66 - 71Publisher: Cambridge University PressPrint publication year: 2006