PRICE STABILITY IN PERIODS OF NEGATIVE INTEREST RATES

Petr Budinskã () and Cristina Gabriela Cosmulese ()
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Petr Budinskã: The University of Finance and Administration, Estonská 500, 101 00 Praha 10-VrÅ¡ovice, Czech
Cristina Gabriela Cosmulese: The University of Finance and Administration, Estonská 500, 101 00 Praha 10-Vršovice, Czech

European Journal of Accounting, Finance & Business, 2024, vol. 12, issue 2, 83-89

Abstract: The connections between the ECB's unconventional “negative interest rate†measure and the overall goal of price stability are analyzed. Here there is a particular focus on the effectiveness of the measure during the Negative Interest Rate Period (NIRP) and the effectiveness in times of skyrocketing inflation. We will continue to examine whether the ECB's measures work in both the short run and the long run. The result is that the “negative interest rate†measure worked very well. It has been proven to contribute to price stability. In times of skyrocketing inflation, the ECB's control mechanisms via the interest rate still work. We proved this using the quantity theory of money, which applies both, in the long term and in the short term, and both during the NIRP and during positive interest rate structure phases.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:scm:ejafbu:v:12:y:2024:i:2:p:83-89

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