The Rate of Interest

Connell Fanning and David O Mahony
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Connell Fanning: National University of Ireland
David O Mahony: University College

Chapter 7 in The General Theory of Profit Equilibrium, 1998, pp 118-145 from Palgrave Macmillan

Abstract: Abstract The traditional theory of interest, as Keynes understood it (CW, VII: Chapter 14, with Appendix; also CW, XIV: 101–4), was an essential part of a body of economic theory which he regarded as dealing with the ‘real-exchange economy’ (CW, XIII: 409). The task which he sought to undertake, therefore, was to develop an explanation of the phenomenon of interest in the monetary economic system. In doing so he saw himself as filling one of the three major gaps, as he described them, in traditional economic theory (CW, VII: 31). His theory of the determination of the rate of interest and his explanation of the rôle of the rate of interest in the economic system completes his analysis of the ‘system’s determinants’ on the demand-side. The other two determinants, it will be recalled, are the propensity to consume and the schedule of the marginal efficiency of capital (CW, VII: 183–4).

Keywords: Economic System; Banking System; Capital Gain; Future Rate; Monetary Authority (search for similar items in EconPapers)
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-50228-4_7

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DOI: 10.1057/9780230502284_7

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