On Interest as a Monetary Phenomenon and the ‘Best’ Interest-rate Policy

Massimo Pivetti
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Massimo Pivetti: University of Rome La Sapienza

Bulletin of Political Economy, 2019, vol. 13, issue 2, 167-187

Abstract: The article discusses the real effects of interest-rate policy, as well as its impact on inflation, once the traditional concept of a ‘natural’ real rate of interest is discarded and interest is viewed as a monetary phenomenon, a true policy variable subject to a wide range of policy objectives and constraints, which contributes to determine normal production costs. Attention is then focused on the merits of cheap money, whilst it is maintained, by contrast, that a persistent zero real interest-rate policy would ultimately be incompatible with capitalist production. The article concludes by pointing out the implications of the main arguments put forward here for the status of the central bank and the question of capital control.

Keywords: Monetary policy; rate of interest; normal production costs; rate of profits; inflation; cheap money policy; effects of a zero-interest rate policy (search for similar items in EconPapers)
JEL-codes: E11 E25 E31 E43 E58 E61 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:awu:journl:v:13:y:2019:i:2:p:167-187

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