Author:
Missaglia Marco,Sanchez Patricia
Abstract
We argue that even in the case that banks are able to maintain the interest rate at a level that they want (the most “radical” version of the theory of endogenous money), liquidity preference continues to constitute a key element when determining the real equilibrium of the economy. In a framework of endogenous money, the Keynesian theory of liquidity preference still constitutes a theory that determines level of income. Financial markets matter, and the Kaldorian idea that liquidity preference “ceases to be of any importance” can only be defended under a set of very restrictive assumptions.
Publisher
Universidad Nacional de Colombia
Subject
General Economics, Econometrics and Finance,Social Sciences (miscellaneous),Arts and Humanities (miscellaneous)
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