Edited by Louis-Philippe Rochon and Sergio Rossi
Chapter 15: The rate of interest as a macroeconomic distribution parameter: horizontalism and post-Keynesian models of distribution and growth
This chapter reviews the main arguments put forward against the horizontalist view of endogenous credit and money and an exogenous rate of interest under the control of monetary policies. It argues that the structuralist arguments put forward in favour of an endogenously increasing interest rate when investment and economic activity are rising, owing to increasing indebtedness of the firm sector or decreasing liquidity in the commercial-bank sector, raise major doubts from a macroeconomic perspective. This is shown by means of examining the effect of increasing capital accumulation on the debt–capital ratio of the firm sector in a simple Kaleckian distribution and growth model.
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