Overcoming Zero Lower Bound on Interest Rate without any Inflation or Inflationary Expectations

Singh, Gurbachan

doi:10.1177/2277978714525308

Cited by 2 publications

(2 citation statements)

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“…This may be added to end encryption that sometimes accompanies payment systems that make it less likely to decode, thus boosting such electronic platforms' safety and security. Thirdly, an economy that relies on digital cash is better able to conduct its monetary policy through the central bank as people are not usually able to hoard cash when central banks lower interest rates in a bid to stimulate a depressed economy, thus going around the zero lower bound theory of interest rates (Singh 2014). Finally, electronic money may have the positive effect of reducing bank runs given that depositors may not be able to withdraw the physical cash from the banks and keep it at home.…”

Section: The Future Of Cashmentioning

confidence: 99%

Idiosyncrasies of Money: 21st Century Evolution of Money

et al. 2021

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This paper examines the question of what kind of money will govern the 21st century by examining the developments which characterise this landscape. On the basis of a review of the available literature and evidence, it is clear that certain technological innovations, such as the movement towards electronic money, will undoubtedly change how we operate. However, the conclusion in this paper is less sanguine regarding the prospects of a global currency, regional monetary unions, or states’ exit from or central banks’ control of money. This paper also sees poor prospects for cryptocurrencies at the moment, given their focus on the decentralisation and politicisation of money, because money requires a backstopping force, making it inherently political. Finally, this paper considers how regulators may seek to ensure that money in its digital form is not taken advantage of and applied in malevolent activities. The study used correlation to establish the level of association among variables. A multiple regression analysis was used to draw an econometric model explaining the relationship between the independent and dependent variables. The following variables were used as independent variables: monetary aggregate (M1), harmonised index of consumer prices (HICP), Euro Interbank Offered Rate (EURIBOR), US dollar/euro, and the USD value of Bitcoin. Multiple regression predicted that when inflation rises, the money supply will decrease. M1 includes cash in circulation, current deposits, and other than demand deposits. The study concludes that price increases encourage people to keep their money in longer-term deposits, including in cryptocurrency. Additionally, an increase in EURIBOR and US dollar/euro reduces the supply of money. Otherwise, an increase in the price of bitcoin in the economy would increase the overall money supply.

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Section: The Future Of Cashmentioning

confidence: 99%

Idiosyncrasies of Money: 21st Century Evolution of Money

et al. 2021

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“…3.See Eggertsson and Woodford (2003), Chattopadhyay (2013) and Singh (2014) for optimal monetary policies under liquidity trap and zero lower bound.…”

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confidence: 99%

The Macroeconomics of Demonetization: Theory and Some Conjectures

Chattopadhyay

2019

South Asian Journal of Macroeconomics and Public Finance

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The withdrawal of high-denomination paper money in India—popularly termed ‘demonetization’—has generated interest among common people to understand what the usual macroeconomic consequences of such one-time monetary shock are. This article conjectures (a) that such unanticipated supply-side replacement of paper money of higher denominations may lead to a currency ‘trap’ in the short run and a permanent increase in the hoarding of lower denomination currencies in the long run and (b) that the effect on the GDP in the medium run can be ambiguous in a simple IS-LM framework once the effects of variable price level and changing inflation expectations are captured through the presence of an informal sector. JEL Classification: E 12, E 26, E 44, E 52

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Overcoming Zero Lower Bound on Interest Rate without any Inflation or Inflationary Expectations

Cited by 2 publications

References 20 publications

Idiosyncrasies of Money: 21st Century Evolution of Money

Idiosyncrasies of Money: 21st Century Evolution of Money

The Macroeconomics of Demonetization: Theory and Some Conjectures

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