Abstract
The General Theory changed how most economists and policy-makers viewed the rate of interest. Before 1936 and the subsequent spread of ‘Keynesianism’, it had been thought of as a relative price. It was determined by the workings of the economy so as to effect the allocation of currently available resources between the production of goods for current consumption and the production of goods which would allow future consumption. After the General Theory, it was thought of as a variable which could, subject to a lower bound set by the liquidity trap, be manipulated by monetary policy so as to affect the level of economic activity and the unemployment rate.
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© 1988 National Economic Development Office
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Mills, T.C., Wood, G.E. (1988). Interest Rates and the Conduct of Monetary Policy. In: Eltis, W., Sinclair, P. (eds) Keynes and Economic Policy. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-10338-6_12
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DOI: https://doi.org/10.1007/978-1-349-10338-6_12
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