Overcoming the zero bound on interest rate policy

Preprint
Publisher Website
Google Scholar
  • 1 January 2000
    • preprint
      • Published in RePEc
Abstract
The paper proposes three options for overcoming the zero bound on interest rate policy: a carry tax on money, open market operations in long bonds, and monetary transfers. A variable carry tax on electronic bank reserves could enable a central bank to target negative nominal interest rates. A carry tax could be imposed on currency to create more leeway to make interest rates negative. Quantitative policy--monetary transfers and open market purchases of long bonds--could stimulate the economy by creating liquidity broadly defined. A central bank needs more fiscal support than usual from the Treasury to pursue quantitative policy at the interest rate floor.
All Related Versions

This publication has 0 references indexed in Scilit: