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The idea of the hypothesis of the money supply as a theory is based on the Post Keynesians. This hypothesis suggests that there is a causal relationship between credit and money supply and monetary base in an economy. With the developing financial system and financial innovations, the endogeneity of money supply is one of the priority issues to be studied. For this reason it is important to consider the endogeneity of money supply in a theoretical and empirical context. In this study, the hypothesis of endogeneity money supply for Turkey's economy was investigated by Toda-Yamamoto and Bootstrap Toda-Yamamoto causality analysis procedures for the period 2006-2018. Empirical findings show that there is a causal relationship between credit and money supply, monetary base and money multiplier. There is also a causal relationship from money supply to credit. In this case, the bidirectional causality relationship between credit and money multiplier supports the view of liquidity preference regarding the endogeneity of money supply. [ABSTRACT FROM AUTHOR]

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The theory of interest, one of the most debated issues in the history of economic thought, can be classified as the monetary theory of interest and the nonmonetary theory of interest. The nonmonetary theory of interest, developed by classical economists and their modern followers, suggests that interest rate is determined by real factors. According to this theory, interest rate is determined by saving reflecting the supply of capital and by investment reflecting the demand for capital. In Keynes’s analysis, however, the monetary nature of interest rate is explained by the liquidity preference theory. That the concept of interest is a monetary phenomenon and that it is therefore determined by the money market constitute the essence of this approach. According to Keynes, the major reason for the confusion about the theory of interest is the fact that the intrinsic characteristics of money under conditions of a developed money economy, unlike a real exchange economy, have not been understood properly. That money not only has the function of a medium of exchange, but it also has the function of a medium of accumulating value has a central role in the developed theory of interest. In this context, Keynes defines the rate of interest, which is determined by the preference for liquidity, not by a decision for saving, as the reward for parting with liquidity for a specified period. [ABSTRACT FROM AUTHOR]