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Interest rates, income distribution and the monetary policy transmissions mechanism under endogenous money: what have we learned 30 years on from Horizontalists and Verticalists?

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  • John Smithin

    (Professor Emeritus of Economics and Senior Scholar, York University, Toronto, ON, Canada)

Abstract

This paper suggests that the near-optimal setting of the real policy rate of interest (the real overnight rate in Basil Moore's home country of Canada) is zero. This will achieve as close an approximation as possible to a fair distribution of income in a particular sense. It will also promote financial stability, inflation stability, high growth, full employment and higher real wages.

Suggested Citation

  • John Smithin, 2020. "Interest rates, income distribution and the monetary policy transmissions mechanism under endogenous money: what have we learned 30 years on from Horizontalists and Verticalists?," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 17(3), pages 381-398, November.
    • Handle: RePEc:elg:ejeepi:v:17:y:2020:i:3:p381-398
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    More about this item

    Keywords

    Basil J. Moore; endogenous money; income distribution; monetary policy transmissions mechanism; zero interest rate policy (ZIRP); zero real policy rate (ZRPR);
    All these keywords.

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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