Negative Nominal Interest Rates: History and Current Proposals

Martin Menner Cordelius Ilgmann
Authors registered in the RePEc Author Service: Cordelius Ilgmann () and Martin Menner ()

No 201143, Working Papers from Institute of Spatial and Housing Economics, Munster Universitary

Abstract: Given the renewed interest in negative interest rates as a means for overcoming the zero bound on nominal interest rates, this article reviews the history of negative nominal interest rates and gives a brief survey over the current proposals that received popular attention in the wake of the financial crisis of 2007/08. It is demonstrated that ‘taxing money’ proposals have a long intellectual history and that instead of being the conjecture of a monetary crank, they are a serious policy proposal. In a second step the article points out that, besides the more popular debate on a Gesell tax as a means to remove the zero bound on nominal interest rates, there is a class of neoclassical search-models that advocates a negative tax on money as efficiency enhancing. This strand of the literature has so far been largely ignored by the policy debate on negative interest rates.

Keywords: negative interest rates; history of economic thought; Silvio Gesell; zero bound; search-theoretical models; monetary policy (search for similar items in EconPapers)
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Citations: View citations in EconPapers (25)

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Journal Article: Negative nominal interest rates: history and current proposals (2011)
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