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Setting the Pace of Capitalism - A Post-Keynesian Perspective on Interest and Profits as a Monetary Phenomenon

Nielsen, Tune LU (2017) EKHM52 20171
Department of Economic History
Abstract
Financial markets turn all their attention towards the Federal Reserve Bank and the European Central Bank whenever there are the slightest rumors of a change in the policy rate of interest. But why is this rate so important and what is the theoretical basis of its existence in the first place? In modern economic literature theories of interest are rarely explicitly touched upon and interest is often simply taken for granted in most textbooks. This paper intends to show that there does not exist one single theory of interest. Although the history of economic thought and current central banking policy, demonstrates a clear tendency to view interest as a real phenomenon, there exists a large group of post-Keynesian economists who, instead,... (More)
Financial markets turn all their attention towards the Federal Reserve Bank and the European Central Bank whenever there are the slightest rumors of a change in the policy rate of interest. But why is this rate so important and what is the theoretical basis of its existence in the first place? In modern economic literature theories of interest are rarely explicitly touched upon and interest is often simply taken for granted in most textbooks. This paper intends to show that there does not exist one single theory of interest. Although the history of economic thought and current central banking policy, demonstrates a clear tendency to view interest as a real phenomenon, there exists a large group of post-Keynesian economists who, instead, tend to view interest as a monetary phenomenon. By looking at lessons from actual experience this paper shows how the historical and contemporary post-Keynesian challenge to the consensus view potentially allows us to interpret interest as purely a monetary phenomenon. Furthermore, it attempts to show how this interpretation, if accepted, has far reaching consequences, not only regarding the understanding of interest, but also our understanding of profits and the distribution of income. (Less)
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author
Nielsen, Tune LU
supervisor
organization
course
EKHM52 20171
year
type
H2 - Master's Degree (Two Years)
subject
keywords
History of economic thought, post-Keynesianism, monetary theory of interest, endogenous money, Silvio Gesell, John Maynard Keynes, Knut Wicksell
language
English
id
8917621
date added to LUP
2017-06-29 13:38:41
date last changed
2017-06-29 13:38:41
@misc{8917621,
  abstract     = {Financial markets turn all their attention towards the Federal Reserve Bank and the European Central Bank whenever there are the slightest rumors of a change in the policy rate of interest. But why is this rate so important and what is the theoretical basis of its existence in the first place? In modern economic literature theories of interest are rarely explicitly touched upon and interest is often simply taken for granted in most textbooks. This paper intends to show that there does not exist one single theory of interest. Although the history of economic thought and current central banking policy, demonstrates a clear tendency to view interest as a real phenomenon, there exists a large group of post-Keynesian economists who, instead, tend to view interest as a monetary phenomenon. By looking at lessons from actual experience this paper shows how the historical and contemporary post-Keynesian challenge to the consensus view potentially allows us to interpret interest as purely a monetary phenomenon. Furthermore, it attempts to show how this interpretation, if accepted, has far reaching consequences, not only regarding the understanding of interest, but also our understanding of profits and the distribution of income.},
  author       = {Nielsen, Tune},
  keyword      = {History of economic thought,post-Keynesianism,monetary theory of interest,endogenous money,Silvio Gesell,John Maynard Keynes,Knut Wicksell},
  language     = {eng},
  note         = {Student Paper},
  title        = {Setting the Pace of Capitalism - A Post-Keynesian Perspective on Interest and Profits as a Monetary Phenomenon},
  year         = {2017},
}