Tom Palley on Endogenous Money

New paper by Tom Palley titled "Horizontalists, verticalists, and structuralists: The theory of endogenous money reassessed."

From the abstract:

This paper uses the occasion of the twenty-fifth anniversary of Basil Moore’s book, Horizontalists and Verticalists, to reassess the theory of endogenous money. The paper distinguishes between horizontalists, verticalists, and structuralists. It argues Moore’s ho- rizontalist representation of endogenous money was an over-simp- lification that discarded important enduring insights from monetary theory. The structuralist approach to endogenous money retains the basic insight that the money supply is credit driven but reme- dies horizontalism’s omissions and over-simplifications. Twenty-five years later, horizontalism has largely morphed into structuralism. The theoretical challenge going forward is to develop the role of money and finance in a Keynesian theory of output determination. As regards monetary policy, the challenge is how to conduct policy in a world of endogenous money. These concerns emanate natu- rally from a structuralist perspective on endogenous money.