Rate of profit and interest in a growth theory with endogenous money

Abstract

This paper attempts to incorporate an endogenous money approach into post-Keynesian growth theory in order to derive the full employment equilibrium rate of interest as well as that of profit. This rate of interest, named the ideal rate of interest, differs from the rate of profit in that it is in proportion to a monetary variable, not a real variable. Further, the rate of profit also differs from the rate of interest as a premium because it is productive. The rate of interest could be important in explaining circumstances in which financial capital has been accumulated in excess.