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Kalecki’s critique of wicksellianism and the miss-specification of negative interest rates


  • Jan Toporowski

    (Faculty of Law & Social Sciences SOAS, University of London)


This paper examines the logic of the arguments for negative interest rates. These arise from a Wicksellian theoretical framework that attributes low investment to a ‘natural’ or ‘real’ rate of interest (that is the rate of profit on real investments) that is below the money rate of interest. At near zero money rates of interest the low investment is presumed to be caused by a negative natural rate of interest. The paper outlines Kalecki’s reasons for believing that in fact the rate of profit for the economy as a whole is in general positive and, in any case, the rate of profit is differentiated in the economy by industry and firm. This removes the Wicksellian rationale for negative interest rates.

Suggested Citation

  • Jan Toporowski, 2018. "Kalecki’s critique of wicksellianism and the miss-specification of negative interest rates," NBP Working Papers 295, Narodowy Bank Polski, Economic Research Department.
  • Handle: RePEc:nbp:nbpmis:295
    Note: I am grateful for comments on an earlier draft of this paper from Charles Goodhart, Peter Kriesler, David Laidler, and Zbigniew Polański. Their generosity leaves me with sole responsibility for any errors remaining in this paper.

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    References listed on IDEAS

    1. Shaikh, Anwar, 2016. "Capitalism: Competition, Conflict, Crises," OUP Catalogue, Oxford University Press, number 9780199390632.
    2. John C. Williams, 2016. "Monetary Policy in a Low R-star World," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
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    More about this item


    Kalecki; monetary theory; rate of interest;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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