Template-type: ReDIF-Paper 1.0
Author-Name: Alejandro Francisco Peláez Ruiz-Fornells
Author-Workplace-Name:
 Departamento de Economía Aplicada III (Política Económica). Universidad Complutense de Madrid.
Author-Workplace-Homepage: https://www.ucm.es//departamento-de-economia-aplicada,-publica-y-politica
Title: The symetry underlymg real interest rate behaviour and the limk to investment flows: an ex ante formal treatment
Abstract: From a purely speculative approach and under the usual assumptions, a wellknown symmetrical structure appears, connecting 
	neoclassical and Keynesian views of the markets. This framework admits graphical and formal explanation. 
	In previous work, we addressed this topic reaching some conclusions. Now that the credit bust spreads worldwide, we focus on 
	formal analysis leading to more advanced results linked to our previous perspective that seems to hold. Using an ex ante 
	formal treatment, we conclude that when applied to explain real interest rate behaviour, this symmetrical look shows a 
	countercyclical pattern of response for this variable in neoclassical approach, while being procyclical from Keynesian view. 
	This implies either a magnifying or a stabilizing role for the real rate in each case and could affect the financial to real 
	investment flows ratio and, as a result, aggregate capital stock composition. The trend this ratio could follow, though 
	difficult to explain, is of great interest to help explain the behaviour of financial markets. This appears as a key feature 
	to approach the focal points of the financial markets reform.
Keywords:
 Symmetry interest rate, Capital stock, Capital composition, Financial markets, Business cycle, Investment flows.
Length: 38 pages

Creation-Date: 2009 
Number: 09-03 
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/doctra09-03.txt	
File-URL: https://eprints.ucm.es/id/eprint/8671/1/0903.pdf
File-Format: Application/pdf
Handle: RePEc:ucm:doctra:09-03