On Pasinetti's 'natural' rate of interest

This paper provides a concise exposition of the notion of ‘natural rate of interest’ introduced by Luigi Pasinetti in his structural change analysis. Its normative nature is suitably stressed: it is that rate of interest that allows that debt and credit relations among individuals do not alter a distribution of national income based on the ‘labour principle’, that is, a situation where each individual perceives income in proportion to the quantity of labour provided.