Inicio > Economía marxista > “What is the Relationship Between the Rates of Interest and Profit? An Empirical Note for the U.S. Economy, 1869-2009”: Alejandro Valle Baeza y Ivan Mendieta Muñoz

“What is the Relationship Between the Rates of Interest and Profit? An Empirical Note for the U.S. Economy, 1869-2009”: Alejandro Valle Baeza y Ivan Mendieta Muñoz

The current paper aims at contributing to the study of the relationship between the rates of interest and profit by offering an empirical analysis of the United States (U.S.) economy during the period 1869-2009, which has rendered the following findings: 1) the general rate of profit has fixed an upper limit to the real short-term and long-term Federal Funds interest rates; 2) the real long-term Federal Funds interest rate has undergone movements similar to those of the general rate of profit, whereas the short-run Federal Funds interest has experienced opposite movements regarding the latter; and 3) there is evidence supporting heterodox theories emphasizing that monetary policy affects the distribution of income through the modification of the rate of profit, which entails that monetary factors can be directly allowed in the determination of the rate of profit.

Introduction

As Panico (1987a) states, the analysis of the relationship between the rates of interest and profit involves the important issue of how to integrate the theory of money and that of value and distribution. Accordingly, the study of the relationship between both variables is essential for the understanding of the development of capitalist economies since they are prominent variables in the process of capitalist accumulation, the analysis of technical change, the periodization of capitalism, the study of economic crisis and the income distribution.

Despite its well-known importance and the relatively abundant theoretical literature, there have been few empirical studies specifically dealing with the relationship between the rates of interest and profit. The current paper aims at contributing to the study of the relationship between the rates of interest and profit by offering an empirical analysis of the United States (U.S.) economy during the period 1869-2009, which has rendered the following findings: 1) the general rate of profit has fixed an upper limit to the real short-term and long-term Federal Funds interest rates; 2) the real long-term Federal Funds interest rate has undergone movements similar to those of the general rate of profit, whereas the short-run Federal Funds interest has experienced opposite movements regarding the latter; and 3) there is evidence supporting heterodox theories emphasizing that monetary policy affects the distribution of income through the modification of the rate of profit, which entails that monetary factors can be directly allowed in the determination of the rate of profit.

In this sense, we believe that the results found here stress the relevance of the study of the relationship between these variables and can be seen as a plea to undertake future theoretical and empirical research aimed at providing more accurate results, particularly regarding the existing relationship between both variables and the controversy over the interest rate-profit rate link (Dickens, 1999 [2001]).

The rest of the paper is organized as follows. Section II briefly discusses the basic theoretical arguments related to the study of the analysis of the relationship between the rates of interest and profit, section III presents some stylized facts and the formal empirical tests for the U.S. economy during the period 1869-2009, and finally section IV synthesizes the main conclusions and offers some relevant issues addressed for future research.

Valle Baeza, Alejandro y Mendieta Muñoz, Iván. «What is the Relationship Between the Rates of Interest and Profit? An Empirical Note for the U.S. Economy, 1869-2009». Investigación Económica LXXI, no . 280 junio 2012): 163–183.

Fuente: http://vallebaeza.wordpress.com/

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