iBusiness

Volume 16, Issue 1 (March 2024)

ISSN Print: 2150-4075   ISSN Online: 2150-4083

Google-based Impact Factor: 0.61  Citations  

The Validity of Keynes’ Preference for Liquidity Principle in the Endogenous Money Supply Thesis among Post-Keynesians

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DOI: 10.4236/ib.2024.161001    45 Downloads   179 Views  

ABSTRACT

This article seeks to redefine the place and role of Keynes principle of preference for liquidity in the post-Keynesian theoretical system. To do this, it is a question of demonstrating the compatibility, often called into question, of the principle of preference for liquidity with that of effective demand and, consequently, with the post-Keynesian thesis of endogenous money. It turns out that this compatibility is possible, but at the cost of some revisions of Keynes “General Theory”, in particular, the generalization of the principle of preference for liquidity to all economic agents. Furthermore, we show the importance of the principle of preference for liquidity in explaining not only financial and economic fluctuations, but also their different amplitudes.

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Bakala, T. (2024) The Validity of Keynes’ Preference for Liquidity Principle in the Endogenous Money Supply Thesis among Post-Keynesians. iBusiness, 16, 1-23. doi: 10.4236/ib.2024.161001.

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