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Negative nominal interest rates: history and current proposals

  • Cordelius Ilgmann

    ()

  • Martin Menner

    ()

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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Article provided by Springer in its journal International Economics and Economic Policy.

Volume (Year): 8 (2011)
Issue (Month): 4 (December)
Pages: 383-405

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Handle: RePEc:kap:iecepo:v:8:y:2011:i:4:p:383-405
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=111059

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