Rates of Interest, Effective Demand and Economic Growth

Abstract

In the paper is argued that there is deep controversy of the rate of interest impact on investment and aggregate demand. In general terms, this relation can be direct (in negative or positive terms) or, indirect, affecting the differential of future returns in present terms (investment demand price) and the investment supply price or modify the distribution of income. In terms of the Mexican economy we found that rate of interest stabilizes the exchange rate, lowers inflation, with hardly any impact in economic activity