Introduction to the Theory of Interest

Joseph W. Conard

• Publisher: University of California Press
• Year: 2023
• Print ISBN: 9780520320635
• eBook ISBN: 9780520320642
• Edition: 1
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

An Introduction to the Theory of Interest, published by the Bureau of Business and Economic Research at the University of California, offers an authoritative exploration of one of the most central and complex concepts in economic theory. From its roots in ancient philosophy, where Aristotle and Church Fathers debated its morality, to its critical role in modern economic thought, the concept of interest has consistently challenged the analytical frameworks of great thinkers. This comprehensive volume situates interest at the crossroads of history, theory, and empirical analysis, shedding light on its evolution and enduring relevance in economic discourse.

Professor Conard brings over a decade of meticulous research to this exhaustive study, blending rigorous theoretical inquiry with practical insights drawn from first-hand experience in financial markets. Covering everything from the contributions of Ricardo and Keynes to the mechanisms of contemporary interest rate systems, this work serves as both a historical review and a practical guide. Whether you are a student of economic history, a policy analyst, or simply an enthusiast of financial theory, An Introduction to the Theory of Interest offers invaluable perspectives on the intricate dynamics of interest rates and their profound impact on fiscal and monetary policy.

This title is part of UC Press's Voices Revived program, which commemorates University of California Press’s mission to seek out and cultivate the brightest minds and give them voice, reach, and impact. Drawing on a backlist dating to 1893, Voices Revived makes high-quality, peer-reviewed scholarship accessible once again using print-on-demand technology. This title was originally published in 1959.

Table of contents

• Cover
• Title
• Copyright
• CONTENTS 1
• I INTRODUCTION: THE RELEVANCE AND NATURE OF INTEREST AND INTEREST THEORY THE RELEVANCE OF THE THEORY OF INTEREST
• THE NATURE OF INTEREST
• THE NATURE OF THE THEORY OF INTEREST
• THE DILEMMA POSED BY THE EXISTENCE OF INTEREST
• PART ONE NONMONETARY THEORIES OF INTEREST
• II BOEHM-BAWERK’S REVIEW AND CRITICISM OF EARLIER DOCTRINES
• DEFINITIONS
• PRODUCTIVITY THEORIES
• USE THEORIES
• ABSTINENCE THEORIES
• LABOR THEORIES
• EXPLOITATION THEORIES
• III THE THEORY OF BOEHM-BAWERK
• IV IRVING FISHER S THEORY OF INTEREST
• GEOMETRIC PRESENTATION
• NOTES ON ALGEBRAIC PRESENTATION
• SOME PROBLEMS OF INTERPRETATION
• RECAPITULATION AND MODIFICATION FOR UNCERTAINTY
• APPENDIX: ALGEBRAIC PRESENTATION OF FISHER’S THEORY OF INTEREST
• V OTHER NONMONETARY THEORIES OF INTEREST
• LERNER’S ANALYSIS OF INVESTMENT-DEMAND CURVES
• KEYNES’ MEC AND FISHER’S RATE OF RETURN OVER COST
• INTEREST AS A MONOPOLY RETURN
• KNIGHT’S THEORY OF INTEREST
• RAMSEY’S MODEL
• APPRAISAL OF THE KNIGHT-RAMSEY THEORIES OF INTEREST
• SCHUMPETER'S THEORY OF INTEREST
• VI THE DESIRABILITY OF INTEREST
• 1. Is it desirable that those who must pay interest be required to do so?
• 2. Is it desirable that interest be retained by those who receive it in a free-enterprise economy?
• 3. Should interest rates be determined on free markets?
• 4. Is there a role for interest under socialism?
• VII NONMONETARY THEORIES OF INTEREST: SUMMARY AND CONCLUSIONS
• PART TWO MONETARY THEORIES OF INTEREST
• VIII MONEY RATES, OWN-RATES, AND REAL RATES OF INTEREST BASIC CONCEPTS
• RATES OF INTEREST ON MONEY AND ON GOODS BY VARIOUS STANDARDS
• RATES OF RETURN OTHER THAN THE RATE OF INTEREST
• RECAPITULATION OF BASIC CONCEPTS
• EQUILIBRIUM RELATIONS BETWEEN INTEREST RATES AND OTHER RATES OF RETURN
• COMPARATIVE RATES OF RETURN AND THE LEVEL OF EMPLOYMENT
• FISHER’S REAL RATE OF INTEREST
• APPENDIX: RELATIONS BETWEEN r, MEH, AND MEI
• IX SKETCH OF LOANABLE-FUNDS AND LIQUIDITY-PREFERENCE THEORIES OF INTEREST
• LOANABLE-FUNDS THEORY
• LIQUIDITY-PREFERENCE THEORY
• APPENDIX A: TESTS OF LOANABLE-FUNDS EQUATIONS AS OUTLINED IN TEXT
• APPENDIX B: THE KEYNESIAN L CURVE
• X AN APPARENT DIGRESSON ON SWEDISH AND ROBERTSONIAN CONCEPTS
• DEFINITIONS
• THREE SIMPLE MODELS
• CONCEPTS OF SAVING IN RELATION TO THE THEORY OF INTEREST
• APPENDIX: CONCEPTS OF HOARDING
• XI THE RATE OF INTEREST AND GENERAL EQUILIBRIUM: A KEYNESIAN MODEL ASSUMING CONSTANT PRICES
• HICKS’ LM AND SI CURVES: A TWO DIMENSIONAL MODEL
• A THREE-DIMENSIONAL MODEL OF LM AND SI CURVES
• ALGEBRAIC PRESENTATION
• ADJUSTMENT PERIODS
• XII LIQUIDITY-PREFERENCE THEORY COMPARED WITH LOANABLE-FUNDS THEORY
• HICKS’ GENERAL-EQUILIBRIUM ANALYSIS
• SINGLE-DAY ANALYSIS: ROBERTSONIAN TYPE OF LOANABLE-FUNDS THEORY
• AN ALGEBRAIC RESTATEMENT
• STOCK CONCEPTS VERSUS FLOW CONCEPTS
• DEMAND AND SUPPLY OF SECURITIES VERSUS SUPPLY AND DEMAND FOR CASH
• SWEDISH TYPE OF LOANABLE-FUNDS THEORY
• SUMMARY AND CONCLUSIONS
• XIII INTEREST THEORY AND PRICE VARIABILITY COMPLETING THE GENERAL EQUILIBRIUM SYSTEM
• ALTERNATIVE MODELS
• APPLICATIONS
• CONCLUSIONS REGARDING MONETARY AND NONMONETARY THEORIES OF INTEREST
• QUALIFYING COMMENTS ON THE MODELS USED IN PART TWO
• PART THREE THE TERM STRUCTURE OF INTEREST RATES
• XIV INTRODUCTION TO RATE STRUCTURE ON METHOD
• SIMPLIFYING ASSUMPTIONS OF THE CONVENTIONAL THEORY OF RATE STRUCTURE
• XV THEORETICAL ANALYSIS THE NEOCLASSICAL THEORY
• RATE CHANGES OVER TIME
• MODIFICATION OF THE PERFECT-FORESIGHT MODEL TO PERMIT UNCERTAIN EXPECTATIONS
• MODIFICATION OF THEORY BECAUSE OF MARKET IMPERFECTIONS AND IMPERFECT SUBSTITUTABILITY OF SECURITIES
• APPENDIX A: DERIVATION OF EQUATION FOR LONG RATE OF INTEREST
• APPENDIX B: EQUALITY OF EFFECTIVE YIELDS ON SECURITIES OF DIVERSE MATURITY DATES
• APENDIX C: Derivation of Table 6
• XVI EMPIRICAL TESTS OF THE THEORY OF RATE STRUCTURE
• 1. To what extent should one expect rates on securities of different term to move in the same direction when changes in rates occur?
• 2. When yields change, what is the relation between the size of change on shorts and on longsl
• 3. What is the relation between the size of price changes on longs and on shorts?
• 4. Should one expect the yield curve to be monotonic?
• 5. What factors control the direction of slope of the yield curve?
• 6. How does the term mixture of outstanding securities influence the structure of rates?
• APPENDIX A: ANNUAL POST-ACCORD CHANGES IN TOTAL DEBT OUTSTANDING
• APPENDIX B: ONE-YEAR YIELDS ON SECURITIES ASSUMING YIELD CONSTANT AS OF JULY 30, 1954
• XVII RATE STRUCTURE: SUMMARY AND CONCLUSIONS
• OUTLINE OF MODIFICATIONS TO THE NEOCLASSICAL THEORY
• THE BEHAVIOR OF THE STRUCTURE OF INTEREST RATES
• INTEGRATION OF MODIFIED STRUCTURE THEORY WITH THE GENERAL THEORY OF INTEREST
• EVALUATION: THE MODIFIED THEORY AND ALTERNATIVES
• INDEX