Monetary policy with an optimal interest structure

Thomas Huth (), Norbert Olah () and Dirk Löhr ()
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Thomas Huth: Institute of Economics, Leuphana University of Lüneburg, Germany
Norbert Olah: Institute of Economics, Leuphana University of Lüneburg, Germany
Dirk Löhr: Institute of Economics, Leuphana University of Lüneburg, Germany

No 179, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: From the normatively given aims of the macroeconomic equilibrium, which describe the target state of an economy system, necessary conditions are derived at an optimal growth path with maximum consumption and maximum profits on the interest structure of a market economy, by using the golden rule of capital accumulation of Allais and the own-rate of interest theory of Keynes. From the conditions for an optimal interest structure a new monetary policy is developed, which promises stability without compound interest effect, growth without compulsion, stability of prices and full employment payable from interest savings.

Keywords: liquidity premium; liquidity trap; liquidity charges; interest structure; own-rate of interest; negative interest; neutral liquidity; optimal liquidity; neutral money; optimal growth path; Allais theorem; golden rule of capital accumulation; quantity equation; circulation safeguarding; price stability; monetary policy; monetary order policy. (search for similar items in EconPapers)
Pages: 17 pages
Date: 2010-07
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