Negative Nominal Interest Rates: Three Ways to Overcome the Zero Lower Bound

By W. Buiter. 2009

162 citations recorded by the source corpus.

The paper considers three methods for eliminating the zero lower bound on nominal interest rates and thus for restoring symmetry to domain over which the central bank can vary its 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 numeraire from the currency/medium of exchange/means of payment and introducing an exchange rate between the numeraire and the currency which can be set to achieve a forward discount (expected depreciation) of the currency vis-a-vis the numeraire when the nominal interest rate in terms of the numeraire is set at a negative level for monetary policy purposes.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/0c3854ff5e24b30d875e667c5461dd7ef444b7b6

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In Economics and Econometrics

Citations in the corpus

Costs and Benefits to Phasing out Paper Currency (2015, background): “Buiter (2009) credits Gesell (1916) as the first to moot the idea of taxing currency.”