Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/277226 
Authors: 
Year of Publication: 
2011
Citation: 
[Journal:] Intervention. European Journal of Economics and Economic Policies [ISSN:] 2195-3376 [Volume:] 08 [Issue:] 2 [Year:] 2011 [Pages:] 389-404
Publisher: 
Metropolis-Verlag, Marburg
Abstract: 
The paper argues that beyond the deviations of the long-term interest rate the monetary authority may cause, it is the rate determined by the market conventional expectations that prevails eventually. Lasting influence requires the authority to be capable of changing the market conventional expectations, not only refinancing conditions. The paper also explores the implicit financial transactions behind interest rate determination in post-Keynesian simple macro-models. It points out symmetry between the money and finance markets in equilibrium models. As a consequence of endogenous money, the finance market cannot but clear along with the money market, which sheds light on the rejection of the 'loanable funds' theory. In disequilibrium business cycle models, on the other hand, the symmetry is between the financial and goods markets, as in the 'loanable funds' theory.
Subjects: 
endogenous money
equilibrium interest rate
convention
finance
post-Keynesian economics
JEL: 
E12
E40
E43
E44
E51
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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