Negative interest rates : an effective monetary tool?

An increasing number of economies are moving their interest rates towards the theoretical zero bound of interest rates in response to the COVID-19 crisis; there is a growing need to study the implications negative interest rates have on the effectiveness of the monetary policy. Between 2012 to 2016, five central banks moved their interest rates into negative territory in a precarious experiment aimed to reflate the respective economies after a series of aftershocks from the global financial crisis of 2008. Consequently generating a significant amount of empirical data that economists can conclude from. The effects of negative interest rates are still a largely uncharted area of research. Still, a small but growing body of literature has been published on the effects of negative interest rates, and we aim to add on to that knowledge. We use a difference-in-difference method to compare the pass-through of interest rates in two economies between 2012 through 2019, Norway with positive policy rates, and Sweden with negative policy rates. The results indicate that there was a pass-through of policy rates to retail rates in Sweden, and therefore it was an effective monetary tool.

Authors dc:creator

• Ágústa Tryggvadóttir 1996-
• Jóhann Ari Sigfússon 1994-

Contributors dc:contributor

• Háskólinn í Reykjavík

• Hagfræði
• Vextir
• Peningastefna
• Economics
• Interest rates
• Monetary policy

Language dc:language.iso

en

Handle dc:identifier.uri

http://hdl.handle.net/1946/36197

OAI identifier oai:identifier

oai:skemman.is:1946/36197