Advertisement

Interest Rates, Interest Spreads and Monetary Circulation: Theoretical Framework and Empirical Implications for Macroeconomic Performance

  • Mario Seccareccia

Abstract

Traditional neoclassical macroeconomics confers an important position to interest rates in determining macroeconomic activity but pays little attention to the possible role of interest spreads. In contrast, as Augusto Graziani (1987, p. 25; 2003, p. 123) makes it abundantly clear, the relation among subsets of the vast array of interest rates in a modern monetary economy may be of critical significance, especially since these rates pertain to different aspects of the process of monetary circulation. Indeed, as soon as one adopts a circuitist perspective where credit relations are crucial and where, inter alia, the distinction, made famous by Graziani (1987), between initial and final finance, becomes relevant, suddenly the relations among the various rates associated with the flux/reflux process take on new meaning and offer insights that were hitherto inconceivable within traditional macroeconomic analysis. The object of this chapter is to discuss how some of these interest rates are envisioned within the framework of the monetary circuit, and what theoretical and empirical implications changes in both levels and interest spreads could have on macroeconomic performance.

Keywords

Interest Rate Central Bank Inflation Rate Banking Sector Real Interest Rate 
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.

References

  1. Barran, F., Coudert, V. and Majon, B. (1995) ‘Taux d’intérêt, spreads, comportement bancaire: les effets sur l’activité réelle’, Revue économique, 46, pp. 625–34.Google Scholar
  2. Graziani, A. (1987) ‘Keynes’s Finance Motive’, Économies et sociétés, 21, pp. 23–42.Google Scholar
  3. Graziani, A. (1989) ‘Money and Finance in Joan Robinson’s Works’, in G.R. Feiwel (ed.), The Economics of Imperfect Competition and Employment: joan Robinson and Beyond (New York University Press), pp. 613–30.Google Scholar
  4. Graziani, A. (1990) ‘The Theory of the Monetary Circuit’, Économies et sociétés, 24, pp. 7–36.Google Scholar
  5. Graziani, A. (2003) The Monetary Theory of Production (Cambridge University Press).CrossRefGoogle Scholar
  6. Nell, E.J. (1967) ‘Wicksell’s Theory of Circulation’, Journal of Political Economy, 75, pp. 386–94.CrossRefGoogle Scholar
  7. Robinson, J. (1956) The Accumulation of Capital (London: Macmillan).Google Scholar
  8. Rousseas, S. (1986) Post Keynesian Monetary Economics (Armonk, N.Y.: M.E. Sharpe).CrossRefGoogle Scholar
  9. Seccareccia, M. (1996) ‘Post Keynesian Fundism and Monetary Circulation’, in G. Deleplace and E.J. Nell (eds), Money in Motion: The Post Keynesian and Circulation Approaches (London: Macmillan Press), pp. 400–16.Google Scholar
  10. Seccareccia, M. (2003) ‘Pricing, Investment and the Financing of Production within the Framework of the Monetary Circuit: Some Preliminary Evidence’, in L.-P. Rochon and S. Rossi (eds), Modem Theories of Money (Cheltenham: Edward Elgar), pp. 173–97.Google Scholar
  11. Shan, J., and A. Morris (2002) ‘Does Financial Development “Lead” Economic Growth?’, International Review of Applied Economics, 16, pp. 153–68.CrossRefGoogle Scholar
  12. Smith, R.T. (1999) Money in the Bank: Comparing Bank Profits in Canada and Abroad, Commentary 124 (Toronto: C.D. Howe Institute).Google Scholar

Copyright information

© Mario Seccareccia 2005

Authors and Affiliations

  • Mario Seccareccia

There are no affiliations available

Personalised recommendations