Household Behavior Below the Zero Lower Bound

Asger Lau Andersen (), Niels Johannesen (), Jens Brøndum Petersen (), Sonja Settele () and Johannes Wohlfart ()
Additional contact information
Asger Lau Andersen: University of Copenhagen
Niels Johannesen: Saïd Business School, Oxford University
Jens Brøndum Petersen: University of Copenhagen
Sonja Settele: University of Cologne, ECONtribute, Max Planck Institute for Behavioral Economics
Johannes Wohlfart: University of Cologne, ECONtribute, Max Planck Institute for Behavioral Economics

No 418, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: How do households respond when deposit rates drop below zero? Using administrative micro data and exploiting cross-bank variation in interest rate policies, we study a major episode of negative deposit rates in Denmark affecting two thirds of household deposits. We find that households strongly reduced deposit balances when exposed to negative deposit rates, allocating funds to stock portfolios and consumption. In a large-scale survey, we document important roles for loss aversion, perceived unfairness, intertemporal substitution and return considerations in driving these responses. Our findings suggest that monetary policy can have strong consumption effects in negative territory.

Keywords: Negative interest rates; households; consumption; monetary policy (search for similar items in EconPapers)
JEL-codes: D14 D83 D84 D91 E21 E43 E52 E71 (search for similar items in EconPapers)
Pages: 94 pages
Date: 2026-06
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_418_2026.pdf First version, 2026 (application/pdf)

Related works:
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:ajk:ajkdps:418

Access Statistics for this paper

More papers in ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany Niebuhrstrasse 5, 53113 Bonn, Germany.
Bibliographic data for series maintained by ECONtribute Office ().