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Interest rate in an "econom-ethic" perspective

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  • Giuseppe Garofalo

    ()
    (Department of Economics and Management, University of Tuscia, Viterbo)

Abstract

The paper deals with the topic of interest rate, which has long been confused with usury and is determined by parsimony and the marginal product of capital or, as an alternative, by conventions. It will be shown how the return differentials and the ever changing relationship that financial capital establishes with industrial capital are determined, starting from the risk-free rate or benchmark. As far as the level of the interest rate is concerned, the risks connected with both a "high" and a "low" cost of money are outlined. After having demonstrated how interest rate is, on the one hand, a policy variable and, on the other, a determinant of investments and the output gap, it will be shown how his level affects income distribution, the area in which the dialogue between economics and ethics has been most fertile.

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Bibliographic Info

Article provided by Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore in its journal Rivista Internazionale di Scienze Sociali.

Volume (Year): 120 (2012)
Issue (Month): 4 ()
Pages: 399-412

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Handle: RePEc:vep:journl:y:2012:v:120:i:4:p:399-412

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Keywords: Interest rates; Ethics and economics; Monetary economies; Financial relations;

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