Heterodox
Wicksellian loanable funds theory still lies at the heart of neoclassical economics.This was developed by Knut Wicksell. Wicksellian monetary theory was widely accepted in the period before Keynes’ General Theory, and indeed Keynes himself accepted the natural rate of interest in the Treatise on Money.The real natural rate of interest lies at the heart of Wicksell’s version of loanable funds theory to equilibrate saving and investment, and links Wicksell’s capital theory with his monetary...
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