IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Interest rates, income distribution, and monetary policy dominance: Post Keynesians and the "fair rate" of interest

Listed author(s):
  • Louis-Philippe Rochon
  • Mark Setterfield

>i>In light of the growing interest in "new consensus" models, this paper examines Post Keynesian alternatives to the Taylor rule. It identifies two distinctive approaches to Post Keynesian interest rate policy, which we label the activist and the>/i> parking-it >i>rules. The first approach advocates the use of nominal (or real) interest rates as a tool of aggregate demand fine-tuning, whereas the second approach moves away from reaction functions, claiming that monetary policy has become too dominant in economic discourse. It proposes, instead, an interest rate policy whereby the central bank "parks" the interest rate (real or nominal) according to a specific rule. Three possible parking rules are examinedâthe Smithin rule, the Kansas City rule, and the Pasinetti fair rate rule. The paper then explores the macroeconomic consequences of a genuine Post Keynesian alternative to new consensus monetary policy along the lines of the fair rate rule.>/i>

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.

Volume (Year): 30 (2007)
Issue (Month): 1 (October)
Pages: 13-42

in new window

Handle: RePEc:mes:postke:v:30:y:2007:i:1:p:13-42
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:30:y:2007:i:1:p:13-42. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Nguyen)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.