SECULAR STAGNATION AND THE NEGATIVE INTEREST RATE CONUNDRUM: INTERNATIONAL ANALYSIS OF THE PERIOD 2010-2019

Christopher Warburton

Applied Econometrics and International Development, 2021, vol. 21, issue 1, 19-36

Abstract: The negative interest rate policy (NIRP), which is an unconventional monetary policy, is increasingly being diagnosed for symptoms of secular stagnation as some central banks exploit anticipatory inflation to achieve full employment. Notwithstanding, the efficacy of the unconventional monetary policy (UMP) is precarious and rather ambivalent. This paper argues that NIRP is unsuitable for structural (long-term) macroeconomic problems and that its adoption generates inconsistent and precarious results that are transient and potentially harmful.

Keywords: Ageing population, Expected inflation; Negative interest rates; Rational expectations; Secular stagnation; Poverty (search for similar items in EconPapers)
JEL-codes: E02 E41 E43 E52 E58 (search for similar items in EconPapers)
Date: 2021
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