The Golden Rule revisited: Essays on growth and the financial syste

Conventional use of the Golden Rule relationship has focused on the equality of the rates of growth and interest within the context of steady growth. This dissertation transforms the conventional Golden Rule relationship into an acceleration framework. Rather than reinforcing parity between the rates of growth and interest, equality is enforced between the rates of acceleration. The rates of acceleration are kept in a state of parity over time through a series of arbitrage processes occurring in both the real and financial sectors. While the rates of acceleration will tend toward equality, a persistent differential between the rates of growth and interest (in their levels form) is allowed for. The sign of this differential characterizes the economic regime. A positive differential indicates expansion, while a negative differential indicates stagnation. The reinterpretation of the Golden Rule is supported by an empirical analysis of the postwar United States. Empirical behavior supports the notion that the arbitrage process occurs on the rates of acceleration. The theoretical exposition and empirical evidence is the subject of the first essay.;The second essay provides a mathematical model of the reinterpretation, showing how the interaction between the rates of acceleration of growth and interest generate self-sustaining cycles. The model takes the form of a two dimensional simultaneous equation system where debt accumulation acts as the limiting factor to growth.;The third essay examines various explanations for the rise in interest rates that occurred during the second half of the postwar period. An empirical analysis of nominal and real interest rate behavior is presented, followed by a critical analysis of some common explanations for the dramatic rise. Among the explanations put forth are financial innovation, increased risk, globalization and financial liberalization, and conflict between financial capitalists and industrial capitalists. Each of the explanations is discussed and critically evaluated. Ultimately, a theory utilizing various components of the above-mentioned explanations is put forth.