If Interest Rates Go Negative... Or, Be Careful What You Wish For

Kenneth Garbade and James McAndrews

No 20120829, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The United States has slid into eight recessions in the last fifty years. Each time, the Federal Reserve sought to revive economic activity by reducing interest rates (see chart below). However, since the end of the last recession in June 2009, the economy has continued to sputter even though short-term rates have remained near zero. The weak recovery has led some commentators to suggest that the Fed should push short-term rates even lower?below zero?so that borrowers receive, and creditors pay, interest.

Keywords: Negative; interest; rates (search for similar items in EconPapers)
JEL-codes: E5 G1 G2 (search for similar items in EconPapers)
Date: 2012-08-29
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (6)

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