The Maximum Interest Rate on an Unbalanced Growth Path

Martin Diedrich

No 2000/16, Keele Department of Economics Discussion Papers (1995-2001) from Department of Economics, Keele University

Abstract: Abstract In a steady-state economy, an interest rate that is larger than the maximum growth rate would lead to an inconsistent price system. We identify a similar condition for a multisectoral economy off the steady state: If persistent inflation is to be avoided, the interest rate must not be larger than the maximum growth rate of a feasible subtechnology that is capable of covering final demand.

Keywords: Multisectoral Growth Theory; Capital Theory; Input-Output (search for similar items in EconPapers)
JEL-codes: D57 O41 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2000-12
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Working Paper: The Maximum Interest rate on an Unbalanced Growth Path (1996)
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