Monetary Policy with Negative Nominal Interest Rates

Gauti Eggertsson, Ragnar Juelsrud, and Ella Getz Wold at VoxEU:

Monetary policy with negative nominal interest rates: Economists disagree on the macroeconomic role of negative interest rates. This column describes how, due to an apparent zero lower bound on deposit rates, negative policy rates have so far had very limited impact on the deposit rates faced by households and firms, and this lower bound on the deposit rate seems to be causing a decline in pass-through to lending rates as well. Negative interest rates thus appear ineffective in stimulating aggregate demand. ...