The Interest Rate Should not be Interpreted as a Price

Abstract The paper criticises interpretations of the interest rate as a price. Prices are exchange ratios for different objects; the interest rate is a parameter characterising an intertemporal exchange ratio but is not itself an exchange ratio. Therefore, negative (real) interest rates can arise na...

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Bibliographic Details
Main Author:	Martin Hellwig
Format:	article
Language:	DE
Published:	Springer 2021
Subjects:	Economic theory. Demography HB1-3840 Social history and conditions. Social problems. Social reform HN1-995
Online Access:	https://doaj.org/article/e9fc9e9dc2d644d0aa752442bbe45151
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spelling	oai:doaj.org-article:e9fc9e9dc2d644d0aa752442bbe451512021-11-21T12:29:19ZThe Interest Rate Should not be Interpreted as a Price10.1007/s10273-021-3051-x0043-62751613-978Xhttps://doaj.org/article/e9fc9e9dc2d644d0aa752442bbe451512021-11-01T00:00:00Zhttps://doi.org/10.1007/s10273-021-3051-xhttps://doaj.org/toc/0043-6275https://doaj.org/toc/1613-978XAbstract The paper criticises interpretations of the interest rate as a price. Prices are exchange ratios for different objects; the interest rate is a parameter characterising an intertemporal exchange ratio but is not itself an exchange ratio. Therefore, negative (real) interest rates can arise naturally without policy interventions. Interpretations of the interest rate as a rental rate for capital are shown to be untenable when there are many goods. The paper also sketches the historical background of the discussion, in particular, the English classical economists and Marx, the neoclassical model of Clarke and Wicksell, and Joan Robinson’s criticism of this model.Martin HellwigSpringerarticleEconomic theory. DemographyHB1-3840Social history and conditions. Social problems. Social reformHN1-995DEWirtschaftsdienst, Vol 101, Iss 11, Pp 862-869 (2021)
institution	DOAJ
collection	DOAJ
language	DE
topic	Economic theory. Demography HB1-3840 Social history and conditions. Social problems. Social reform HN1-995
spellingShingle	Economic theory. Demography HB1-3840 Social history and conditions. Social problems. Social reform HN1-995 Martin Hellwig The Interest Rate Should not be Interpreted as a Price
description	Abstract The paper criticises interpretations of the interest rate as a price. Prices are exchange ratios for different objects; the interest rate is a parameter characterising an intertemporal exchange ratio but is not itself an exchange ratio. Therefore, negative (real) interest rates can arise naturally without policy interventions. Interpretations of the interest rate as a rental rate for capital are shown to be untenable when there are many goods. The paper also sketches the historical background of the discussion, in particular, the English classical economists and Marx, the neoclassical model of Clarke and Wicksell, and Joan Robinson’s criticism of this model.
format	article
author	Martin Hellwig
author_facet	Martin Hellwig
author_sort	Martin Hellwig
title	The Interest Rate Should not be Interpreted as a Price
title_short	The Interest Rate Should not be Interpreted as a Price
title_full	The Interest Rate Should not be Interpreted as a Price
title_fullStr	The Interest Rate Should not be Interpreted as a Price
title_full_unstemmed	The Interest Rate Should not be Interpreted as a Price
title_sort	interest rate should not be interpreted as a price
publisher	Springer
publishDate	2021
url	https://doaj.org/article/e9fc9e9dc2d644d0aa752442bbe45151
work_keys_str_mv	AT martinhellwig theinterestrateshouldnotbeinterpretedasaprice AT martinhellwig interestrateshouldnotbeinterpretedasaprice
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The Interest Rate Should not be Interpreted as a Price

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