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The Maximum Interest Rate on an Unbalanced Growth Path


  • Martin Diedrich

    () (Department of Economics Keele University)


Abstract In a steady-state economy, an interest rate that is larger than the maximum growth rate would lead to an inconsistent price system. We identify a similar condition for a multisectoral economy off the steady state: If persistent inflation is to be avoided, the interest rate must not be larger than the maximum growth rate of a feasible subtechnology that is capable of covering final demand.

Suggested Citation

  • Martin Diedrich, 2000. "The Maximum Interest Rate on an Unbalanced Growth Path," Keele Department of Economics Discussion Papers (1995-2001) 2000/16, Department of Economics, Keele University.
  • Handle: RePEc:kee:keeldp:2000/16

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    References listed on IDEAS

    1. Nicholas Economides & Giuseppe Lopomo & Glenn Woroch, 1997. "Strategic Commitments and the Principle of Reciprocity in Interconnection Pricing," Industrial Organization 9701001, EconWPA.
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    More about this item


    Multisectoral Growth Theory; Capital Theory; Input-Output;

    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models


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