Throwing fire on the fire? An institutionalist analysis of the dynamics of money and credit

Abstract

In this paper we analyze the evolution of the relation between money supply and bank credit with the aim of seeing if there is an endogeneity relation between money supply and bank credit. This relation has been established by the institutionalist interpretation, using the "fueling the flames" hypothesis, proposed by the Kindleberger-Minsky model, within the theory of monetary endogeneity. In order to identify the predominant causal relations, we estimate the Granger non-causality test to USA, Japan, Germany and Spain cases during the period 1960-2008.