Advertisement

Robertson and the Liquidity Preference Theory of Interest

  • John R. Presley

Abstract

The final stage in the saving/investment debate in the inter-war period was the introduction by Keynes of the liquidity preference theory of interest. If saving and investment were no longer to act together in the determination of the rate of interest, as in the so called ‘classical’ system, but were to marry themselves through changes in the level of income, how was Keynes to explain the determination of the rate of interest? If he supported the Robertsonian theory of interest,1 his precise theory of the multiplier would be substantially weakened by the influence of saving and investment upon the rate of interest. Of necessity he had to provide in the General Theory a new approach to interest rate determination.

Keywords

Interest Rate Market Rate Speculative Demand Money Balance Loanable Fund 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Robertson and the Liquidity Preference Theory of Interest

  1. 2.
    See, for example, G. Ackley, Macroeconomic Theory, (Collier-Macmillan, 1961).Google Scholar
  2. 13.
    JMK, ‘Alternative theories of the rate of interest’, EJ, Vol. 47, (1937) pp. 241–52. See pp. 200–2.Google Scholar
  3. 14.
    See for example DHR, EMI, pp. 150–169 and especially DHR, ‘Some notes on Mr. Keynes’ General Theory of Employment’, QJE, Vol. 51, (1937) pp. 168–191.Google Scholar
  4. 30.
    DHR, ‘Some Notes on Mr. Keynes’ General Theory of Employment’, QJE, (1937), pp. 182–183.Google Scholar

Copyright information

© John R. Presley 1978

Authors and Affiliations

  • John R. Presley

There are no affiliations available

Personalised recommendations