Since the beginning of the nineteenth century, the dominant view in economic literature relating to the rate of interest has been that while monetary factors determine the everyday fluctuations of interest rate, its average value over long periods depends upon the rate of profits to be made from the employment of capital in production. The causal links between the rates of interest and profits are presumed to proceed from the latter to the former rate. Monetary factors do not directly influence the determination of the rate of profits and of other distributive variables.
KeywordsInterest Rate Real Wage Economic Literature Distributive Variable Monetary Authority
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