Liquidity preference theory had a hard time to defeat the loanable funds approach because Keynes himself failed to elucidate the financing of investment in the General Theory. Liquidity preference is a key element in the credit supply decision of the banking system. Liquidity premium is an...

The paper integrates the two-pillar Phillips curve, which explains expected inflation by the money growth trend, within a simple macro model. A Taylor-like interest rule contains also a money growth target. The model takes into account serially correlated supply and money demand shocks; the...