Editing Interest (section)

===<span id=wicksellinterst>Wicksell's theory</span>===
[[Knut Wicksell]] published his "Interest and Prices" in 1898, elaborating a comprehensive theory of economic crises based upon a distinction between natural and nominal interest rates. 
<blockquote>Wicksell's contribution, in fact, was twofold. First he separated the monetary rate of interest from the hypothetical "natural" rate that would have resulted from equilibrium of capital supply and demand in a barter economy, and he assumed that as a result of the presence of money alone, the effective market rate could fail to correspond to this ideal rate in actuality. Next he supposed that through the mechanism of credit, the rate of interest had an influence on prices; that a rise of the monetary rate above the "natural" level produced a fall, and a decline below that level a rise, in prices. But Wicksell went on to conclude that if the natural rate coincided with the monetary rate, stability of prices would follow.<ref>[[Étienne Mantoux]], "Mr Keynes' ''General Theory''", ''Revue d'Économie Politique'', 1937, tr. in [[Henry Hazlitt]], "The critics of Keynesian economics", 1960.</ref></blockquote>
In the 1930s Wicksell's approach was refined by [[Bertil Ohlin]] and [[Dennis Robertson (economist)|Dennis Robertson]] and became known as the [[loanable funds]] theory.