TY - JOUR AU - Oreiro, José Luís PY - 2000/04/01 Y2 - 2024/03/28 TI - The Debate between Keynes and the “Classics” on Interest Rate Determinants: A Big Waste of Time? JF - Brazilian Journal of Political Economy JA - BJPE VL - 20 IS - 2 SE - DO - 10.1590/0101-31572000-1051 UR - https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/1028 SP - 287-311 AB - <p>This article presents the debate between Keynes and the Classics relative to<br />the determinants of the rate of interest, with the objective of analyze if there is any subject<br />theoretically relevant under discussion. We demonstrate that, contrary to what has been said<br />by many neoclassical scholars like Hicks, there is an important theoretical question being<br />discussed between Keynes and the Classics, that is the mechanism according to which the<br />plans of saving and investment have influence over the rate of interest. For the “Classics”<br />these decisions have immediate influence over the rate of interest, i.e. the immediate impact<br />of variations of saving and investment is over this variable. For Keynes, however, the immediate<br />impact of these variations will be over the level of income and employment. As a result<br />of this effect there will be a change in the level of interest rate. This same question reappears on the debate between Asimakopulos, Kregel and Davidson; but in a different context, that<br />is the consideration of propensity to save as a financial restraint to investment decisions.</p><p><strong>JEL Classification:</strong> E12; E43.</p> ER -