The Rate of Interest and the New Monetary Theory of Loanable Funds

D. Gareth Thomas () and David S. Bywaters
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D. Gareth Thomas: University of Hertfordshire Business School

Chapter Chapter 5 in The Creators of Inside Money, 2021, pp 71-85 from Springer

Abstract: Abstract Four components of rates of interest on both savings and borrowings are analysed here, as in the first edition; a real factor, an inflationary element, a liquidity component, and a risk segment. Then the new monetary model is built on the endogenous loanable funds supply, which is partially controlled by the commercial banks, and partially by the central bank, with the agents’ demand for these funds. The revised presentation of this chapter will apply the model to the financial crisis of 2007/08 with the reserve- and cash-deposit ratios and money multiplier as key elements of the study.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-70366-0_5

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DOI: 10.1007/978-3-030-70366-0_5

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