Artikel

Equilibrium interest rate and financial transactions in post-Keynesian models. Pointing out some overlooked features

The paper argues that beyond the deviations of the long-term interest rate the monetary authority may cause, it is the rate determined by the market conventional expectations that prevails eventually. Lasting influence requires the authority to be capable of changing the market conventional expectations, not only refinancing conditions. The paper also explores the implicit financial transactions behind interest rate determination in post-Keynesian simple macro-models. It points out symmetry between the money and finance markets in equilibrium models. As a consequence of endogenous money, the finance market cannot but clear along with the money market, which sheds light on the rejection of the 'loanable funds' theory. In disequilibrium business cycle models, on the other hand, the symmetry is between the financial and goods markets, as in the 'loanable funds' theory.

Language
Englisch

Bibliographic citation
Journal: Intervention. European Journal of Economics and Economic Policies ; ISSN: 2195-3376 ; Volume: 08 ; Year: 2011 ; Issue: 2 ; Pages: 389-404

Classification
Wirtschaft
General Aggregative Models: Keynes; Keynesian; Post-Keynesian
Money and Interest Rates: General
Interest Rates: Determination, Term Structure, and Effects
Financial Markets and the Macroeconomy
Money Supply; Credit; Money Multipliers
Subject
endogenous money
equilibrium interest rate
convention
finance
post-Keynesian economics

Event
Geistige Schöpfung
(who)
Asensio, Angel
Event
Veröffentlichung
(who)
Metropolis-Verlag
(where)
Marburg
(when)
2011

DOI
doi:10.4337/ejeep.2011.02.10
Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Artikel

Associated

  • Asensio, Angel
  • Metropolis-Verlag

Time of origin

  • 2011

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