Inflation and Real Interest

  title={Inflation and Real Interest},
  author={Robert A. Mundell},
  journal={Journal of Political Economy},
  pages={280 - 283}
  • R. Mundell
  • Published 1 June 1963
  • Economics
  • Journal of Political Economy
THE theory of interest under inflation needs further investigation. Irving Fisher's analysis, which concluded that the money rate of interest rises by the anticipated rate of inflation or falls by the anticipated rate of deflation, was subjected to attack by Keynes: "The mistake lies in supposing that it is the rate of interest on which prospective changes in the value of money will directly react, instead of the marginal efficiency of a given stock of capital."' Fisher himself seems to have… 
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