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Negative nominal interest rates: History and current proposals

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  • Ilgmann, Cordelius
  • Menner, Martin

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. --

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Bibliographic Info

Paper provided by Center of Applied Economic Research Münster (CAWM), University of Münster in its series CAWM Discussion Papers with number 43.

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Date of creation: 2011
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Handle: RePEc:zbw:cawmdp:43

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Keywords: negative interest rates; history of economic thought; Silvio Gesell; zero bound; search-theoretical models; monetary policy;

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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The history of negative nominal interest rates
    by Economic Logician in Economic Logic on 2011-12-19 15:12:00
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Cited by:
  1. Belke, Ansgar & Klose, Jens, 2013. "Modifying Taylor reaction functions in the presence of the zero‐lower‐bound — Evidence for the ECB and the Fed," Economic Modelling, Elsevier, Elsevier, vol. 35(C), pages 515-527.
  2. Ansgar Belke & Jens Klose, 2012. "Modifying Taylor Reaction Functions in Presence of the Zero-Lower-Bound – Evidence for the ECB and the Fed," ROME Working Papers, ROME Network 201203, ROME Network.
  3. Martin Menner, 2011. ""Gesell Tax" and Efficiency of Monetary Exchange," Working Papers. Serie AD, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) 2011-26, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  4. Ulrich van Suntum & Metin Kaptan & Cordelius Ilgmann, 2011. "Reducing the Lower Bound on Market Interest Rates," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, Queensland University of Technology (QUT), School of Economics and Finance, vol. 41(2), pages 133-146, September.
  5. Degens, Philipp, 2013. "Alternative Geldkonzepte - ein Literaturbericht," MPIfG Discussion Paper 13/1, Max Planck Institute for the Study of Societies.

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