fbpx The Case for Implementing Effective Negative Interest Rate Policy | Harvard Kennedy School

Additional Authors:

  • Kenneth Rogoff


The Case for Implementing Effective Negative Interest Rate Policy. Kenneth Rogoff, April 24, 2019, Paper, "This paper explores the case for gradually instituting the changes necessary to implement unconstrained negative interest rate policy as a long-term solution to the zero bound on interest rates (or more precisely the near zero effective lower bound.) We shall argue that if negative interest rate policy can be implemented, it would be by far the most elegant and stable long-term solution to the severe limits on monetary tools that have emerged since the financial crisis. Admittedly, the question of how to resuscitate monetary policy is of more immediate relevance in Europe and Japan, where interest rates are already at the effective zero lower bound (in many cases mildly negative) a decade after the global financial crisis, and more than two decades after Japan’s financial crisis. But even the United States is likely to face severe constraints in the event of another financial crisis, possibly even in a deep recession." Link