Premium
Interactions between Money, Lending and Investment in the UK Private Non‐Financial Corporate Sector
Author(s) -
Brigden Andrew,
Mizen Paul
Publication year - 2004
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2004.00381.x
Subject(s) - economics , investment (military) , monetary economics , simultaneous equations model , endogenous money , money supply , demand deposit , broad money , monetary policy , econometrics , politics , political science , law
In this paper we consider the additional information to be derived from modelling lending, investment and money in a jointly determined system of equations. We allow demand‐ and supply‐side effects to influence the money, investment and lending equations. Using UK corporate data, we find acceptable equilibrium equations for investment, lending and money with a causal chain running from money and lending to investment and money to lending in a dynamic model. There is clear support for ‘value added’ from a lending equation and support for interactions between financial variables and real economic activity.