Rate of profit and interest in a growth theory with endogenous money

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Abstract

This paper attempts to incorporate an endogenous money approach into post-Keynesian growth theory in order to derive the full employment equilibrium rate of interest as well as that of profit. This rate of interest, named the ideal rate of interest, differs from the rate of profit in that it is in proportion to a monetary variable, not a real variable. Further, the rate of profit also differs from the rate of interest as a premium because it is productive. The rate of interest could be important in explaining circumstances in which financial capital has been accumulated in excess.

Original languageEnglish
Pages (from-to)889-901
Number of pages13
JournalCambridge Journal of Economics
Volume28
Issue number6
DOIs
Publication statusPublished - 2004 Nov

Keywords

  • Endogenous money supply
  • Ideal rate of interest
  • Natural rate of growth
  • Post-Keynesian theory of growth and distribution

ASJC Scopus subject areas

  • Economics and Econometrics

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