The Theory of Interest in the Classical Economists

Caminati, Mauro

doi:10.1111/j.1467-999x.1981.tb00669.x

Cited by 11 publications

(10 citation statements)

References 9 publications

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“…The ongoing debate on the best interest rate regime for economic growth has not yet been concluded. Some pioneer scholars believe that favorable interest rates are macroeconomic policy measures intended to encourage private saving (Caminati, 1981;Gupta, 1984;McDonald, 1983;Smyth, Montgomery, & Flavin, 1993). Other studies support the hypothesis that negative interest rates are conduits for increased spending and consumption during a recession (Paleyo-Romero, 2020;Smith, 2021).…”

Section: The Trend Of Saving In Ghanamentioning

confidence: 99%

Private Saving in Ghana: The Combined Efforts of Financial Development, Interest Rates, and Inflation

Alnaa

Matey²

2022

5008

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Understanding private saving behavior of the citizenry is crucial for informed policy decisions in an economy. The reason is not far-fetched; economies gain sustained growth from investment through a positive saving culture. However, much of the available literature is on aggregate savings rather than on private saving behavior. This study looks at the combined effects of financial development, interest rates and inflation rates on private saving behavior among Ghanaians. Data for the study were obtained from the World Bank Development Indicators between 1980 and 2019. Johansen’s cointegration test was employed, and attempts were made to ascertain the existence of a long-run relationship among variables using the vector autoregressive (VAR) model. The study confirms a significant positive relationship between private saving behavior and financial sector development. This partly explains the relevance of deepening the financial sector through reductions in costs of performing transactions and initiating contracts to encourage private saving through improved propensity to save by the old and to attract new entrants. A reliance on macroeconomic variables to forecast the behavior of private saving enjoins policy decision makers to consider the implications of their decisions for private saving. Among the recommendations are, lower borrowing costs across the economy, resulting in increased investment and consumption spending, and hence economic recovery in times of stagnation.

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Section: The Trend Of Saving In Ghanamentioning

confidence: 99%

Private Saving in Ghana: The Combined Efforts of Financial Development, Interest Rates, and Inflation

Alnaa

Matey²

2022

5008

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“…The level of interest rates within the economy and a mechanism of their regulation are the subject of analysis of many economic theories. In classical economics, an interest rate was the remuneration for usability that brings lender the last monetary unit in the last use and was treated as the real economy value, dependent on a level of investment and savings in the economy (Turgot, 1927: 73;Caminati, 1981;Szydło, 2005: 53).…”

Section: Literature Reviewmentioning

confidence: 99%

Negative Interest Rate Risk. Atavism or Normalization of Central Banks’ Monetary Policy

Pyka

Nocoń

2019

Folia Oeconomica

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In the face of the global financial crisis, central banks have used unconventional monetary policy instruments. Firstly, they implemented the interest rate policy, lowering base interest rates to a very low (almost zero) level. However, in the following years they did not undertake normalizing activities. The macroeconomic environment required further initiatives. For the first time in history, central banks have adopted Negative Interest Rate Policy (NIRP). The main aim of the study is to explore the risk accompanying the negative interest rate policy, aiming at identifying channels and consequences of its impact on the economy. The study verifies the research hypothesis stating that the risk of negative interest rates, so far unrecognized in Theory of Interest Rate, is a consequence of low effectiveness of monetary policy normalization and may adopt systemic nature, by influencing – through different channels – the financial stability and growth dynamics of the modern world economy.

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“…It is admitted on all 15 As Mauro Caminati (1981) suggests, important changes in the composition of demand for monetary assets tended to be confined to periods of alarm when the state of confidence collapsed. In normal times, the ratio of the demand for gold and banknotes to monetary income tended to be relatively stable.…”

Section: The Marginalist View In Favour Of Bimetallismmentioning

confidence: 99%

Early marginalist ideas on money: some neglected exceptions to the quantity theory

Feldman

2013

EJPE

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Abstract:The quantity theory of money (QTM) is an important building block of neoclassical economics. This has led scholars to believe that all monetary accounts proposed by marginalist economists are inherently based on the QTM. However, within the bimetallic controversy of the last quarter of the 19th century, there were some neoclassical proposals which departed from the framework of the QTM. In this article, I analyse three of these accounts: Alfred Marshall's symmetallism, Irving Fisher's compensated dollar plan, and Knut Wicksell's inconvertible paper standard. These monetary arrangements-especially the first two of them-have rarely been studied in the literature. Still, their relevance should not be neglected in current times in which the economics profession-both orthodox and heterodox approaches-has moved towards an endogenous money view. The proposals studied also show that the neutrality of money does not necessarily imply the QTM, as it is often suggested.

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The Theory of Interest in the Classical Economists

Cited by 11 publications

References 9 publications

Private Saving in Ghana: The Combined Efforts of Financial Development, Interest Rates, and Inflation

Private Saving in Ghana: The Combined Efforts of Financial Development, Interest Rates, and Inflation

Negative Interest Rate Risk. Atavism or Normalization of Central Banks’ Monetary Policy

Early marginalist ideas on money: some neglected exceptions to the quantity theory

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