Endogenous Money Supply: Turkish Economy (2011-2018)

Abstract

There are basicly two views answering the question of how money is created: according to the exogenous money hypothesis of economic theory central banks have full control over the money stock in the markets and other policy instruments; whereas endogenous money theory postulates money is created by credit demand of economic actors . Demand for credits in turn arises from the production process, triggered by changes in production costs, basicly from a rise in nominal wages. This paper aims to analyze whether money supply creation is endogenous in the Turkish money markets during the period 2011-2018 by use of monthly data, for which cointegration between money supply (money base, M1, M2) and credits is tested by Johansen method and VECM is estimated for specifying direction of causality between the variables. Further, Toda Yamamoto test is applied to check robustness of the results obtained from VECM long and short run causality. Results point at relation from credits to money supply; i.e. money is endogenous and demand determined, also that credits extended by banks form basis of the money supply. İktisadi teoride paranın nasıl yaratıldığı sorusuna iki farklı cevap bulunmaktadır: dışsal para hipotezine göre merkez bankalarının para stoku ve diğer para politikası araçları üzerinde tam kontrolü bulunmaktayken; içsel para teorisine göre para ekonomik aktörlerin kredi talebi üzerine yaratılmaktadır. İçsel para teorisine göre para talebi firma üretim süreçlerinden ortaya çıkmakta, üretim maliyetlerindeki artış ve daha çok da nominal ücretlerdeki artıştan kaynaklanmaktadır. Bu çalışmada aylık veri kullanılarak 2011-2018 arasındaki dönemde para arzının içselliği araştırılmakta; para arzı M1, M2 ile krediler arasında Johansen koentegrasyon ilişkisi olup olmadığı sınanarak, VECM analizi ile değişkenler arasındaki nedensellik sorgulanmaktadır. Buna ilave olarak VECM kısa ve uzun dönem nedensellik testi sonuçlarının güçlü olup olmadığı Toda Yamamoto testiyle sınanmaktadır. Elde edilen sonuçlara gore nedensellik kredilerden para arzına doğrudur; para arzı içsel olup talep tarafından belirlenmekte, banka kredileri para arzının temelini oluşturmaktadır.

Keywords

• Post Keynesian economics
• endogenous Money
• Johansen cointegration
• VECM
• Toda Yamamoto

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