Three Essays on Public Money Creation, Endogenous Bank Credit Creation, and Remaining Empirical Issues: Interest Rates and Inflation
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This dissertation examines the interconnectedness between money/credit creation and its empirical relevance to macroeconomic variables. It takes the position that the amount of money/credit created for GDP-related transactions inevitably influences the business cycle and inflation while the money/credit extension for non-GDP based transactions (mainly for purchasing financial assets) helps explain movements of interest rates, exchange rates, and an asset bubble/crash. With this approach, the main objectives of this dissertation is to demonstrate that 1) excess bank credit creation/depletion for households’ spending is crucial in explaining US inflation, 2) the European Central Bank could successfully contain pressures in struggling sovereign bond markets, relying on its unique power to create its currency (the euro) and 3) interest rate exogeneity is, if not theoretically impossible, difficult to attain due to market psychology and endogenous credit creation. Having recognized effects of money/credit creation on a macroeconomic environment, the dissertation naturally proceeds to suggest policy proposals that guide credit creation and allocation of credit for productive purposes and assign a proper role for public money creation to counter ebb and flow of private credit creation.
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Introduction -- A missing element in the empirical post Keynesian theory of inflation--total credits to households: a first-differenced var approach to US inflation -- The relationship between public debt accumulation and default risk under the ECB'S conventional vs. non-standard monetary policy: a panel data analysis of 9 Eurozone countries (2000-2015) -- Interest rate causality between the Federal funds rate and long-run market interest rates -- Conclusion -- Appendix A. First Appendix -- Appendix A. Second Appendix -- Appendix A. Third Appendix
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Ph.D. (Doctor of Philosophy)