The interest rate snap-back and its implication for the Keynesian-quantity theory dispute

Authors

  • T. MAYER

DOI:

https://doi.org/10.13133/2037-3643/11499

Keywords:

Interest rates, Keynesian theory, quantity theory, snap back

Abstract

Much recent work on the behaviour of interest rates has argued that both long term and short term interest rates decline only very temporarily when the growth rate of money increases. Nominal rates quickly snap back to their previous level. The present work looks at what these findings imply for the Keynesian-quantity theory dispute. The author shows that if the expected real interest rate actually does snap back rapidly, then this provides substantial support for the quantity theory and against Keynesian theory. Therefore, the interest rate snap-back becomes an important issue in the Keynesian-quantity theory debate. 

 

JEL: E43, E12, E13

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Published

2014-01-03

How to Cite

MAYER, T. (2014). The interest rate snap-back and its implication for the Keynesian-quantity theory dispute. PSL Quarterly Review, 29(118). https://doi.org/10.13133/2037-3643/11499

Issue

Vol. 29 No. 118 (1976)

Section

Editorial

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