Interest rates, income distribution and the monetary policy transmissions mechanism under endogenous money: what have we learned 30 years on from Horizontalists and Verticalists?

This paper suggests that the near-optimal setting of the real policy rate of interest (the real overnight rate in Basil Moore's home country of Canada) is zero. This will achieve as close an approximation as possible to a fair distribution of income in a particular sense. It will also promote f...

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Bibliographic Details
Published in:European journal of economics and economic policies 2020-11, Vol.17 (3), p.381-398
Main Author: Smithin, John
Format: Article
Language:English
Subjects:
Approximation
Basil J. Moore
Endogenous
endogenous money
Full employment
Income distribution
Inflation
Inflation rates
Interest rates
Liquidity
Monetary policy
monetary policy transmissions mechanism
Money
Productivity
Real wages
zero interest rate policy (ZIRP)
zero real policy rate (ZRPR)
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Summary:This paper suggests that the near-optimal setting of the real policy rate of interest (the real overnight rate in Basil Moore's home country of Canada) is zero. This will achieve as close an approximation as possible to a fair distribution of income in a particular sense. It will also promote financial stability, inflation stability, high growth, full employment and higher real wages.
ISSN:2052-7772
2052-7764
2052-7772
DOI:10.4337/ejeep.2020.0058