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INTEREST RATES, MONEY GROWTH RATES, INFLATION AND THE ‘EASE’ OR ‘TIGHTNESS, OF MONEY
Author(s) -
Waud Roger N.
Publication year - 1971
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/j.1467-6435.1971.tb00629.x
Subject(s) - economics , interest rate , keynesian economics , nominal interest rate , money supply , fisher hypothesis , inflation (cosmology) , monetary policy , welfare economics , real interest rate , monetary economics , physics , theoretical physics
SUMMARY This paper argues that definite statements can not be made on a priori grounds alone regarding the behavior of interest rates, rates of money growth, and rates of price change as they relate to the ‘ease’ or ‘tightness’ of money. The basic analytical framework is the familiar M etzler ‐type model with monetary and fiscal controls added to allow the government to conduct open‐market operations and levy a lump‐sum income tax. This framework is extended in such a manner that explicit recognition is given to the effects of the rate of growth of the nominal money supply on the simultaneous determination of the nominal interest rate, the real interest rate, the rate of growth of real output, and therate of inflation (or deflation).