The Negative Natural Rate of Interest in the Modern Theories of Liquidity Trap and Secular Stagnation: Back to Böhm-Bawerk via Samuelson

Stefano Di Bucchianico

No 1_2021, STOREPapers from Associazione Italiana per la Storia dell'Economia Politica - StorEP

Abstract: The negative natural rate of interest is since two decades eliciting theoretical and policy debates. It re-emerged, after a relatively long time, in Krugman’s Liquidity Trap model. Later, it was placed at the hearth of the Secular Stagnation theory by Summers. It is argued that Krugman’s negative natural rate of interest ensues from theoretical premises analogous to those present in Samuelson’s overlapping-generations model. In turn, Samuelson obtained a negative equilibrium interest rate by opportunely recasting Böhm-Bawerk’s three causes for a positive rate of interest. The present paper illustrates and analyses this neglected line of thought, until its recent developments.

Keywords: Secular Stagnation; Liquidity Trap; negative natural rate of interest; Krugman; Samuelson (search for similar items in EconPapers)
JEL-codes: B13 B20 B30 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2021-11
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.storep.org/wp/wp-content/uploads/2021/11/WP-1-2021.pdf (application/pdf)

Related works:
Journal Article: The negative natural rate of interest in the modern theories of Liquidity Trap and Secular Stagnation: back to Böhm-Bawerk via Samuelson (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hpo:wpaper:1_2021

Access Statistics for this paper

More papers in STOREPapers from Associazione Italiana per la Storia dell'Economia Politica - StorEP Contact information at EDIRC.
Bibliographic data for series maintained by Mario Aldo Cedrini ().