Interest rate in an "econom-ethic" perspective

Giuseppe Garofalo

Rivista Internazionale di Scienze Sociali, 2012, vol. 120, issue 4, 399-412

Abstract: The paper deals with the topic of interest rate, which has long been confused with usury and is determined by parsimony and the marginal product of capital or, as an alternative, by conventions. It will be shown how the return differentials and the ever changing relationship that financial capital establishes with industrial capital are determined, starting from the risk-free rate or benchmark. As far as the level of the interest rate is concerned, the risks connected with both a "high" and a "low" cost of money are outlined. After having demonstrated how interest rate is, on the one hand, a policy variable and, on the other, a determinant of investments and the output gap, it will be shown how his level affects income distribution, the area in which the dialogue between economics and ethics has been most fertile.

Keywords: Interest rates; Ethics and economics; Monetary economies; Financial relations (search for similar items in EconPapers)
JEL-codes: E42 E43 E44 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:vep:journl:y:2012:v:120:i:4:p:399-412

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