The symetry underlymg real interest rate behaviour and the limk to investment flows: an ex ante formal treatment
From a purely speculative approach and under the usual assumptions, a wellknown symmetrical structure appears, connecting neoclassical and Keynesian views of the markets. This framework admits graphical and formal explanation. In previous work, we addressed this topic reaching some conclusions. Now that the credit bust spreads worldwide, we focus on formal analysis leading to more advanced results linked to our previous perspective that seems to hold. Using an ex ante formal treatment, we conclude that when applied to explain real interest rate behaviour, this symmetrical look shows a countercyclical pattern of response for this variable in neoclassical approach, while being procyclical from Keynesian view. This implies either a magnifying or a stabilizing role for the real rate in each case and could affect the financial to real investment flows ratio and, as a result, aggregate capital stock composition. The trend this ratio could follow, though difficult to explain, is of great interest to help explain the behaviour of financial markets. This appears as a key feature to approach the focal points of the financial markets reform.
|Date of creation:||2009|
|Contact details of provider:|| Phone: +34 913942604|
Web page: http://economicasyempresariales.ucm.es/
More information through EDIRC
|Order Information:|| Postal: Facultad de Ciencias Económicas y Empresariales. Campus de Somosaguas, 28223 - POZUELO DE ALARCÓN (MADRID)|
Web: https://economicasyempresariales.ucm.es/working-papers-ccee Email:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert J. Barro & Xavier Sala-i-Martin, 1990.
"World Real Interest Rates,"
in: NBER Macroeconomics Annual 1990, Volume 5, pages 15-74
National Bureau of Economic Research, Inc.
- Casey B. Mulligan & Xavier Sala-i-Martin, 2000. "Extensive Margins and the Demand for Money at Low Interest Rates," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 961-991, October.
- Cuthbertson, Keith & Taylor, Mark P, 1987. "The Demand for Money: A Dynamic Rational Expectations Model," Economic Journal, Royal Economic Society, vol. 97(388a), pages 65-76, Supplemen.
- Cuthbertson, Keith, 1997. "Microfoundations and the Demand for Money," Economic Journal, Royal Economic Society, vol. 107(443), pages 1186-1201, July.
When requesting a correction, please mention this item's handle: RePEc:ucm:doctra:09-03. 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: (Águeda González Abad)
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.