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On Interest as a Monetary Phenomenon and the ‘Best’ Interest-rate Policy
MASSIMO PIVETTI
The article discusses the real effects of interest-rate policy, as well as its impact on inflation, once the traditional concept of a ‘natural’ real rate of interest is discarded and interest is viewed as a monetary phenomenon, a true policy variable subject to a wide range of policy objectives and constraints, which contributes to determine normal production costs. Attention is then focused on the merits of cheap money, whilst it is maintained, by contrast, that a persistent zero real interest-rate policy would ultimately be incompatible with capitalist production. The article concludes by pointing out the implications of the main arguments put forward here for the status of the central bank and the question of capital control.
Volume :- No.13 (2019)
Issue No :- 2 (2019)
Pages :- 167-187