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On the monetary nature of the interest rate in a Keynes–Schumpeter perspective

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  • Giancarlo Bertocco
  • Andrea Kalajzić

Abstract

Keynes, in the General Theory, explains the monetary nature of the interest rate by means of the liquidity preference theory. The objective of this article is twofold. The first objective is to point out the limits of the liquidity preference theory. The fundamental limitation of this theory is that it does not allow to realize the intent declared by Keynes in 1933 to elaborate a monetary theory of production The second objective is to present a more solid theory of the monetary nature of the interest rate. It will be shown that an essential element of this explanation is Schumpeter’s analysis of the role of bank money in a capitalist economy. In fact, this analysis represents a fundamental tool to explain the characteristics that, according to Keynes, distinguish a monetary economy from a real-exchange economy

Suggested Citation

  • Giancarlo Bertocco & Andrea Kalajzić, 2019. "On the monetary nature of the interest rate in a Keynes–Schumpeter perspective," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 42(4), pages 527-553, October.
    • Handle: RePEc:mes:postke:v:42:y:2019:i:4:p:527-553
    DOI: 10.1080/01603477.2018.1562305
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    Cited by:

    1. Di Bucchianico, Stefano, 2020. "Discussing Secular Stagnation: A case for freeing good ideas from theoretical constraints?," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 288-297.
    2. Callegari, Beniamino & Nybakk, Erlend, 2022. "Schumpeterian theory and research on forestry innovation and entrepreneurship: The state of the art, issues and an agenda," Forest Policy and Economics, Elsevier, vol. 138(C).
    3. Giancarlo Bertocco & Andrea Kalajzić, 2022. "On the monetary nature of savings: a critical analysis of the Loanable Funds Theory," Working Papers PKWP2206, Post Keynesian Economics Society (PKES).
    4. Giancarlo Bertocco & Andrea Kalajzić, 2023. "A critical analysis of the loanable funds theory: some notes on the non-neutrality of money," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 35-55, April.
    5. Stefano Di Bucchianico, 2021. "Negative Interest Rate Policy to Fight Secular Stagnation: Unfeasible, Ineffective, Irrelevant, or Inadequate?," Review of Political Economy, Taylor & Francis Journals, vol. 33(4), pages 687-710, October.

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