Economics of Economic Development: Endogeneity of Rate of Interest and Prices
Published: 2018
Author(s) Name: Satya Prasad Padhi |
Author(s) Affiliation: Professor, Department of Economics, Punjab University, Chandigarh
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Abstract
This paper discusses how economic
development processes incorporate
Keynes’s insight into a monetary production
economy and the related
analytical tools. Money supply has
to be endogenous, in response to
demand conditions; though it provides
an understanding different
from the one underlying the existing
post Keynesian thesis. The present
paper focuses on a different translation
of the liquidity preference-led
determination of rate of interest.
Higher growth phases, associated
with higher growth of endogenous
money supply do not have any inflationary
bias. Inflationary pressures
then should be ascribed to improper
development biases i.e. economic
development problems. This
understanding provides a counternarrative
of the Taylor rule; understanding
evolutions of real forces
for the purpose of understanding the
pressures on rate of interest and inflation
should be the basic policy
focus.
Keywords: N.A.
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