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On the irrelevance of the concept of a natural rate of interest in a Schumpeter–Keynes perspective

Author

Listed:
  • Giancarlo Bertocco

    (University of Insubria)

  • Andrea Kalajzic

    (University of Insubria)

Abstract

The concept of a natural rate of interest is at the core of the contemporary macroeconomic theory. The objective of this work is to develop a sounder critique of the concept of the natural rate of interest than that elaborated from the liquidity preference theory. To this end, we will draw on Schumpeter’s approach to money and credit. In particular, we will show that Schumpeter’s analysis of the role of bank money in the process of development enables elaborating a more solid criticism of the concept of natural rate of interest and a sounder explanation of the Keynesian principle of effective demand than that based on the liquidity preference theory.

Suggested Citation

  • Giancarlo Bertocco & Andrea Kalajzic, 2026. "On the irrelevance of the concept of a natural rate of interest in a Schumpeter–Keynes perspective," Journal of Evolutionary Economics, Springer, vol. 36(1), pages 1-29, April.
    • Handle: RePEc:spr:joevec:v:36:y:2026:i:1:d:10.1007_s00191-025-00923-8
    DOI: 10.1007/s00191-025-00923-8
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    References listed on IDEAS

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    1. Giovanni Dosi & Mauro Napoletano & Andrea Roventini & Tania Treibich, 2016. "The Short- and Long-Run Damages of Fiscal Austerity: Keynes beyond Schumpeter," International Economic Association Series, in: Joseph E. Stiglitz & Martin Guzman (ed.), Contemporary Issues in Macroeconomics, chapter 8, pages 79-100, Palgrave Macmillan.
    2. Giancarlo Bertocco & Andrea Kalajzić, 2024. "Schumpeter and the post‐Keynesian monetary theory," Metroeconomica, Wiley Blackwell, vol. 75(4), pages 546-567, November.
    3. Giancarlo Bertocco & Andrea Kalajzić, 2024. "A Critical Analysis of the Financial Frictions Approach in a Minskyan Perspective," Journal of Economic Issues, Taylor & Francis Journals, vol. 58(1), pages 85-111, January.
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    6. Dosi, Giovanni & Fagiolo, Giorgio & Roventini, Andrea, 2010. "Schumpeter meeting Keynes: A policy-friendly model of endogenous growth and business cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 34(9), pages 1748-1767, September.
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    Keywords

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    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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