Showing 1 - 8 of 8
This paper disproves Wicksell's theory of interest rate. It shows that his theory rests on four unrealistic assumptions. A standard isoquant derives contrary conclusions from Wicksell's: that a drop of interest rate does not raise wage rate, and that a drop of interest rate reduces quantity...
Persistent link: https://www.econbiz.de/10013006957
Growth theory is a dynamic problem, and interest rate must play an important role. This paper proves that Ramsey's interest rate can be very erratic. It then applies Fisher's theory to correct Ramsey's error. Interest rate is an exogenous variable for most people, and it does not vary with their...
Persistent link: https://www.econbiz.de/10012969939
This paper solves the century old puzzle about interest rate with Adam Smith's “Of Stock Lent at Interest”. Interest rate is resulted from the interactions between the borrowers and lenders. It is a function of the default rate of lending and the capital's cost, but it also depends on...
Persistent link: https://www.econbiz.de/10013130240
Samuelson's biological theory of interest rate - that population growth rate and interest rate must be the same - affects many countries, especially in shaping their population and retirement policies. This paper proves that he derives his so-called theorem by many tricks, which are, however, in...
Persistent link: https://www.econbiz.de/10012856222
Samuelson argued that interest rate is either zero or negative. This paper points out why he wanted such result, how he obtained such result, and why such result is actually unwarranted and his theory empty
Persistent link: https://www.econbiz.de/10012857021
This paper disproves Fisher's theory that interest rate is time preference. It shows that the two variables are exogenous, and independent of each other. Fisher's theory is at most an assumption, which is however unacceptable, for it must result in a negative saving supply function. This paper...
Persistent link: https://www.econbiz.de/10012857022
Karl Marx set profit to zero to obtain some maximum interest rate and called it profit rate. He further argued that interest rate must be lower than profit rate. That is Marx’s interest rate theory. This paper disproves Marx’s profit rate, and hence his interest rate theory. It also...
Persistent link: https://www.econbiz.de/10013404387
Karl Marx (1867) defined profit rate as the upper limit of interest rate, and claimed that actual interest rate must be somewhere below this limit. Detesting the uncertainty, Joan Robinson (1959) simply set interest rate to Marx’s profit rate. This paper disproves Robinson
Persistent link: https://www.econbiz.de/10013405407