The Investigation Into Keynes's Interest Theory And Its Applicability To China

Interest Theory, which is the foundation of the interest practice, bears upon the formulation of interest rate policy. In order to provide theoretical references close to economic reality and policy recommendations for the interest rate practice, the paper makes a research on Keynes's Interest Theory and its applicability to China by applying Marxist views and methods.The paper inspects the evolution of Western interest theory and the generation of Keynes's Interest Theory, from the perspective of inheritance. From the nature of interest, interest rate decision and the relationship between interest rate and other macroeconomic variables, the paper makes an analysis of Keynes's Interest Theory, clarifying the basic elements of Keynes's Interest Theory.Then the paper systematically examines the latest development after Keynes's Interest Theory. It holds that Post Keynesian Interest Rate Theory reflects the real economic world vividly, with much obvious era features. From both theory and practice, the paper evaluates Keynes's Interest Theory.Based on the above, the paper makes a textual research on Keynes's Interest Theory's applicability to China, from the interest rate mechanism functions of product market and money market and the coincidence of the economic environment, through empirical analysis and theoretical interpretation. From the examination, it deduces a conclusion that Keynes's Interest Theory has applicability of a certain degree to China's economy and provides useful references for China's interest rate practice.In the end, by references from the reasonable elements of Keynes's Interest Theory, the article ponders over interest rate practice issues, such as China's market-oriented reform of interest rate, change of interest rate mechanism and adjustment of interest rate level, to share my personal views on interest rate with those who care about the interest rate practice of China.