The Interest Rate Should not be Interpreted as a Price
Abstract The paper criticises interpretations of the interest rate as a price. Prices are exchange ratios for different objects; the interest rate is a parameter characterising an intertemporal exchange ratio but is not itself an exchange ratio. Therefore, negative (real) interest rates can arise na...
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| Format: | Article |
| Language: | deu |
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Sciendo
2021-11-01
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| Series: | Wirtschaftsdienst |
| Online Access: | https://doi.org/10.1007/s10273-021-3051-x |
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| _version_ | 1832573729183367168 |
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| author | Martin Hellwig |
| author_facet | Martin Hellwig |
| author_sort | Martin Hellwig |
| collection | DOAJ |
| description | Abstract The paper criticises interpretations of the interest rate as a price. Prices are exchange ratios for different objects; the interest rate is a parameter characterising an intertemporal exchange ratio but is not itself an exchange ratio. Therefore, negative (real) interest rates can arise naturally without policy interventions. Interpretations of the interest rate as a rental rate for capital are shown to be untenable when there are many goods. The paper also sketches the historical background of the discussion, in particular, the English classical economists and Marx, the neoclassical model of Clarke and Wicksell, and Joan Robinson’s criticism of this model. |
| format | Article |
| id | doaj-art-e9fc9e9dc2d644d0aa752442bbe45151 |
| institution | Kabale University |
| issn | 0043-6275 1613-978X |
| language | deu |
| publishDate | 2021-11-01 |
| publisher | Sciendo |
| record_format | Article |
| series | Wirtschaftsdienst |
| spelling | doaj-art-e9fc9e9dc2d644d0aa752442bbe451512025-02-02T03:15:23ZdeuSciendoWirtschaftsdienst0043-62751613-978X2021-11-011011186286910.1007/s10273-021-3051-xThe Interest Rate Should not be Interpreted as a PriceMartin Hellwig0zur Erforschung von Gemeinschaftsgütern, Max-Planck-InstitutAbstract The paper criticises interpretations of the interest rate as a price. Prices are exchange ratios for different objects; the interest rate is a parameter characterising an intertemporal exchange ratio but is not itself an exchange ratio. Therefore, negative (real) interest rates can arise naturally without policy interventions. Interpretations of the interest rate as a rental rate for capital are shown to be untenable when there are many goods. The paper also sketches the historical background of the discussion, in particular, the English classical economists and Marx, the neoclassical model of Clarke and Wicksell, and Joan Robinson’s criticism of this model.https://doi.org/10.1007/s10273-021-3051-x |
| spellingShingle | Martin Hellwig The Interest Rate Should not be Interpreted as a Price Wirtschaftsdienst |
| title | The Interest Rate Should not be Interpreted as a Price |
| title_full | The Interest Rate Should not be Interpreted as a Price |
| title_fullStr | The Interest Rate Should not be Interpreted as a Price |
| title_full_unstemmed | The Interest Rate Should not be Interpreted as a Price |
| title_short | The Interest Rate Should not be Interpreted as a Price |
| title_sort | interest rate should not be interpreted as a price |
| url | https://doi.org/10.1007/s10273-021-3051-x |
| work_keys_str_mv | AT martinhellwig theinterestrateshouldnotbeinterpretedasaprice AT martinhellwig interestrateshouldnotbeinterpretedasaprice |