Abstract: Constitution means complementarity and improvement.Interest rate is an ancient and essential research field in economics where representative findings include Knut Wicksell's interest rate theory of 1898,John M.Keynes's interest rate theory of 1936,and Dennis Robertson's interest rate theory of 1940.After the Second World War,Frank J.Fabozzi and Franco Modigliani made the existing interest rate theories more accurate by means of optimal equilibrium,but in general there was no essential progress in this field.These classical theories,once surveyed under new historical contexts,show defects to varying degrees:Knut Wicksell's interest rate theory could not reflect new changes of credit monetary system;John M.Keynes confused loan funds with currency;Dennis Robertson did not consider consumption demand and government demand for load funds.Actually,interest rate is determined by supply of and demand for load funds.Besides monetary supply which acts as exogenous variable,supply of load funds is also influenced by savings which serve as endogenous variable.Demand for load funds is determined not only by investment,but also by excessive consumption and government budget deficit.Therefore,it is necessary to replenish consumption demand for load funds and government demand for load funds,of which the former is a function of interest rate and expected income,while the latter is a function of budget deficit.Based on American macroeconomic data,econometric test on this new demand function for load funds proves its validity in explaining changes of interest rate in reality.

Key words: interest, interest rate, load funds, monetary supply, budget deficit