The wonderful world of negative nominal interest rates, again
Willem Buiter 04 June 2009
Some economists are arguing that central banks should set negative nominal interest rates. This column explains the basics by describing three ways of removing the zero lower bound on nominal interest rates: abolish currency, tax currency holding, or decouple the unit of account from the currency by introducing a new currency.
I was in Frankfurt at the European Central Bank recently to meet people and give a presentation on negative nominal interest rates (the “zero lower bound problem”). For reasons I don’t understand, this topic generates almost as much heat and emotion as a critical piece on Obama.
monetary policy, Federal Reserve, negative interest rates