Negative nominal interest rates: history and current proposals

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Abstract:Given the renewed interest in negative interest rates as a means for overcoming the zero bound on nominal interest rates, this article reviews the history of negative nominal interest rates and gives a brief survey over the current proposals that received popular attention in the wake of the financial crisis of 2007/08. It is demonstrated that 'taxing money' proposals have a long intellectual history and that instead of being the conjecture of a monetary crank, they are a serious policy proposal. In a second step the article points out that, besides the more popular debate on a Gesell tax as a means to remove the zero bound on nominal interest rates, there is a class of neoclassical search-models that advocates a negative tax on money as efficiency enhancing. This strand of the literature has so far been largely ignored by the policy debate on negative interest rates.

Negative interest rates: Causes and consequences

“…Consistent with Bernanke (2012), the discussion on negative interest rates and the appropriate alternative monetary policy tools focuses primarily on demand-side explanation of systematic deflation, which we believe is a serious oversight (see for example Danthine, 2013;Goyal and McKinnon, 2003;Ilgmann and Menner, 2011;Bassetto, 2004;Perold, 2012;Cecchetti, 1988;Kimball, 2015). More importantly, the alternative monetary policy tools designed to boost inflationary expectations at the zero percent nominal interest rate level can only be successful if the underlying deflationary causes are based on demand-side issues.…”

Eurozone Governance: Deflation, Grexit 2.0 and the Second Coming of Jean‐Claude Juncker

“…The ECB is not alone in embracing negative interest rates in the wake of the global financial crisis – Denmark, Sweden, and Switzerland have taken similar steps – but this is an experimental move nonetheless (Ilgmann and Menner, ). Practically speaking, it means that commercial banks holding deposits at the European Central Bank will be charged for this service rather than receiving an interest payment.…”

Optimal Monetary Policy and Imperfect Financial Markets: A Case for Negative Nominal Interest Rates?

“…See Ilgmann and Menner (2011) for a review of the literature on negative nominal interest rates. With a borrowing constraint on households, however, we show that satiating the economy with real money 2.…”

“…With a borrowing constraint on households, however, we show that satiating the economy with real money 2. See Ilgmann and Menner (2011) for a review of the literature on negative nominal interest rates.…”