Masters Theses

Date of Award

8-1992

Degree Type

Thesis

Degree Name

Master of Arts

Major

Economics

Major Professor

Paul Davidson

Abstract

This thesis provides an overview over different approaches to the theory of the supply of money. With respect to the determinants of the money supply, the orthodox view of largely exogenous money is opposed to more recent concepts that emphasize the quantity of money in an economy as endogenously determined. The concepts of exogeneity and endogeneity are defined in terms of interest elasticity and stability of the money supply curve in order to allow a clear distinction between the opposing views on the basis of a formal framework. The monetarist, accommodationist and structuralist approaches to the money supply process are represented in terms of these criteria and compared with respect to their basic properties. Institutional and legal arrangements in the United States and Germany are considered in order to supply evidence which of the presented approaches is best supported in the real world. It is concluded that, for theoretical and institutional reasons, a view of the money supply emphasizing both exogenous and endogenous forces best appropriates the situation in real world economies. The structuralist position is supported by the arguments developed and preferred over either a simple exogenous or endogenous approach.

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