Keystroke Money: Empirical Evidence From India (1999-2019)

Louis Lamaury, University of Leeds

Since the revival of money supply endogeneity of the 1980s, post-Keynesian monetary theory has become increasingly accepted in central banking institutions. In developed economies, academia has paved the way forward through empirical research but has often neglected developing economies. This paper investigates the exogenous-endogenous money supply hypothesis in India from 1999 to 2019. In doing so, it extends previous research by an additional twenty years and broadens the scope of the endogenous money debate. Monthly data series were applied to an error-correction model, vector autoregressive model, and stationarity test, to examine orthodox money exogeneity and heterodox money endogeneity. Over the sample period, the findings reject post Keynesian structuralism as well as neo-Keynesian exogeneity. Instead, results support the presence of horizontalist endogeneity, challenging previous research. The paper explores the policy-making implications for monetary targeting, economic stimulus measures, and central bank control.

Read the full paper here.


Image: Fiona Cincotta/Currency Live

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