Negative nominal interest rates: Three ways to overcome the zero lower bound

Willem Buiter

The North American Journal of Economics and Finance, 2009, vol. 20, issue 3, 213-238

Abstract: The paper considers three methods for eliminating the zero lower bound on nominal interest rates and thus for restoring symmetry to the domain over which the Central Bank can vary its official policy rate. They are: (1) abolishing currency (which would also be a useful crime-fighting measure); (2) paying negative interest on currency by taxing currency; and (3) decoupling the numéraire from the currency/medium of exchange/means of payment and introducing an exchange rate between the numéraire and the currency; this exchange rate can be set over time to achieve a forward discount (expected depreciation) of the currency vis-à-vis the numéraire when the nominal interest rate in terms of the numéraire is set at a negative level for monetary policy purposes.

Keywords: Monetary; policy; Zero; interest; rate; policy; Liquidity; trap; Quantitative; easing; Gesell; Eisler (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (119)

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Related works:
Working Paper: Negative Nominal Interest Rates: Three ways to overcome the zero lower bound (2009)
Working Paper: Negative nominal interest rates: three ways to overcome the zero lower bound (2009)
Working Paper: Negative Nominal Interest Rates: Three ways to overcome the zero lower bound (2009)
Working Paper: Negative Nominal Interest Rates: Three ways to overcome the zero lower bound (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:20:y:2009:i:3:p:213-238

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