Orthodox criticisms of "financial repression" in LDCs argue that interest rate liberalization promotes investment and economic growth by increasing the supply of bank credit and improving the efficiency of credit allocation. The present paper develops a Kaleckian model in which increases in deposit interest rates may lower investment and growth by placing downward pressure on effective demand--even if interest rate liberalization results in decreased borrowing costs. The focus of the Kaleckian model on effective demand issues is then contrasted with prior criticisms of the proliberalization view. Finally, the relevance of the Kaleckian approach is demonstrated in connection with the important role of effective demand and distributional effects in the failure of the Chilean financial liberalization to promote a stable growth of output and investment. Copyright 1991 by Taylor and Francis Group
Download Info
To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page
whether it is in fact available.
3. Perform a search for a similarly titled item that would be
available.
For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).
Related research
Keywords:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Gerald Epstein & Ilene Grabel, 2007.
"Financial Policy,"
Publications
3, International Policy Centre for Inclusive Growth.
[Downloadable!]