Endogenous Money in the Age of Financial Liberalization Gökçer Özgür and Korkut A. Ertürk

[Working Paper No. 05/2008] The paper reports results showing a much weakened statistical relationship between total bank credit, total deposits and the broad money supply for the period after 1995 for the US, where no statistical causation can be discerned in either direction. This has been the result of the changing nature of the credit creation process where banks have acquired almost total independence in extending credit from required reserves and core deposits and an ability to circumvent the constraint posed by capital requirements through asset securitization. Because of the explosive increase in nonbank intermediation this has caused, the expansion…

Asset Prices, Liquidity Preference and the Business Cycle Korkut A. Erturk

The role Keynes’ treatment of investment in the General Theory played in weakening his liquidity preference argument has been little recognized. This paper goes back to the original argument in the Treatise and shows that its reconsideration can greatly enhance the Keynesian analysis of the business cycle. asset_prices (Download the full text in PDF format)