On the one hand the ruling party makes a big deal of foreign investment yet, on the other, its short rule has seen uncertainty spike, which delivers the kiss of death to much of exogenous money
. The stock market, whether or not an accurate barometer of the real economy, is a magnet for hot money if the conditions are right.
Examples of specific topics discussed include the concept of fundamental uncertainty as the key contribution of The General Theory to economic theory; the rise and fall of Keynesian macroeconomics; the comparability of The General Theory to the New Keynesian synthesis in relation to modelers of interest rate rules and the assumptions of endogenous and exogenous money
supply; Keynes in relation to the theories of Milton Friedman, Karl Marx, Piero Sraffa, and Nicholas Kaldor; comparative theories of interest in Keynesian, classical, neoclassical, and Marxian economics; and extending Keynes' theory through the interpretation of money as a public monopoly.
Kaldor's initial attack (1970) was on the narrower interpretation and he very effectively challenged its assumptions of a stable demand for money function and a (potentially) exogenous money
supply under the control of the monetary authorities.
We examine two monetary policy rules--an exogenous money growth rule and an interest rate rule based on Taylor (1993)--and two price adjustment mechanisms--flexible prices found in a typical real business cycle (RBC) model and sticky prices found in a typical New Keynesian model.
Kimball (1995), for example, examined a sticky-price model that assumed a constant velocity of money and an exogenous money supply rule.
Two classes of monetary policy regimes are considered: a regime in which the central bank follows an exogenous money growth rule and a regime with a nominal interest rate rule in which money growth is endogenous.
Standard macroeconomic models include several other important features: shocks other than [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII] are incorporated to capture other sources of fluctuations; the simple specification of an exogenous money
supply in (2c) is discarded in favor of a specification that allows the money supply to respond to the endogenous variables in the model; and finally, the dynamics of the model are generalized through the incorporation of sticky prices, costs of adjusting output, information lags, etc.
With an exogenous money
supply and sticky prices, the results are driven mainly by the fact that the real money supply cannot change at the time the plan is implemented.
In addition to an exogenous money supply, older monetarism, he says, rested on two pillars: a stable aggregate demand-for-money function and the expectations-augmented Phillips curve.
The fundamental proposition says that one cannot have a nominal income equilibrium not pinned down by an at least partly exogenous money supply and without a stable aggregate demand-for-money function [Patinkin, 1965, pp.
The first part of the Girton and Roper paper, dealing with exogenous money
supplies, relies heavily on two assumptions.