Monetary Policy in The General Theory

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2008-6

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Ekinci, Nazım Kadri

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The theory of interest rate is central to Keynesian macroeconomics. This paper provides an interpretation of Keynes’ conventional theory of the interest rate. Accordingly, the interest rate can only be determined in the market, if expectations converge. The central bank is a market-maker, because of its capacity to manage expectations and to affect market outcomes. On the other hand, interest rate and asset prices determine the rate at which wealth is converted into income. This may be a crucial consideration when discussing the question of what monetary policy can do.

Subject Keywords

Determination Of Interest Rates, Term Structure Of Interest Rates, Financial Markets And The Macroeconomy, Monetary Policy

URI

https://hdl.handle.net/11511/58421

Journal

ODTÜ Gelişme Dergisi

Collections

Department of Economics, Article

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Citation Formats

N. K. Ekinci, “Monetary Policy in The General Theory,” ODTÜ Gelişme Dergisi, vol. 35, no. 1, pp. 121–132, 2008, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/58421.