Integrating the Financing of Production and a Rate of Interest into Production Price Models.

In the ordinary Sraffian production price equations, a rate of interest, i, is introduced as an additional variable. It is argued that even in the long run it will generally fall short of the rate of profit on own capital, r. Employing two simple behavioral functions for industrial and financial capitalists and integrating the quantity side permits to maintain the one degree of freedom. Furthermore, definite results ca n be derived on the relationships between the, now, three distributive variables i, r, and the real wage rate. Copyright 1988 by Oxford University Press.