The endogeneity of credit money¹

Abstract

This article examines the important post-Keynesian theme of the endogeneity of the money supply. A series of Granger-Sims tests of causality are employed to ascertain the main determinants of credit money. The results support the view that the money supply is endogeneously determined and that changes in the wage bill are the main determinants of increases in the demand for bank credit.