Abstract
Having considered the broad institutional structure we now turn to examine the process through which the stock of money comes into existence. This chapter develops the traditional money multiplier model, and considers the standard criticisms that have been raised against it. The argument is developed in terms of comparative statics, i.e. a comparison of static-equilibrium positions. This is an unfortunate framework within which to discuss the dynamic process of money creation, particularly if we are concerned with the relationship between the supply of money and the rest of the economy. The following chapter, therefore, presents a more dynamic approach, emphasising the importance of the demand for bank credit in the money-supply process, and considering the implications of such a model for macroeconomic analysis.
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References
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© 1980 Richard Coghlan
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Coghlan, R. (1980). The Supply of Money: The Multiplier Approach. In: The Theory of Money and Finance. Palgrave, London. https://doi.org/10.1007/978-1-349-86121-7_9
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DOI: https://doi.org/10.1007/978-1-349-86121-7_9
Publisher Name: Palgrave, London
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