The analysis will involve a tripartite system of agents in the form of depositors (which includes households and firms), retail banks and the monetary authorities in determining the money supply process within the economic system. It is the interaction of these economic actors that determines the money supply process in the form a monetary multiplier that supports the real economy.
KeywordsDepositors Money supply Monetary multiplier Economy
References and Further Reading
- Clower, R. W. (1967). A Reconsideration of the Microfoundations of Monetary Policy. Western Economic Journal (Now Economic Inquiry), 6, 1–9. In R. W. Clower (Ed.) (1969), Monetary Theory: Selecting Readings (pp. 202–211). London: Penguin Books.Google Scholar
- King, R. G., & Plosser, C. I. (1984, June). Money, Credit and Prices in a Real Business Cycle. American Economic Review, 74, 363–380.Google Scholar
- McLeay, M., Radia, A., & Thomas, R. (2014). Money Creation in the Modern Economy. Bank of England Quarterly Bulletin, 54(1), 4–13.Google Scholar
- Wicksell, K. (1936). Interest and Prices: A Study of the Causes Regulating the Value of Money. London: Published on behalf of the Royal Economic Society, Macmillan.Google Scholar