Studying the negative interest rate regimes

Abstract

The days of healthy growth with target stable inflation are over. The world is still recovering from the financial collapse of 2008 and debt problems of the European union. At one side there are economic problems of low growth, unemployment, and deflation while on the other there are political events like Brexit. But the result is the same – central banks around the world are fighting to get their economies on track. The conventional weaponry of accommodative monetary policy has become redundant. Now central banks are experimenting with unconventional policies like quantitative easing and negative interest rates. It started with just one economy and today the number is six. Six economies have made policy rates negative within a span of last 18 months. There’s were several speculations about the impact and efficiency of Negative Interest Rate Policy (NIRP) when it started. Now that some time has passed some things have been proven right and some wrong. This paper aims to do a study of how really negative rates have worked the world over with specific focus on Sweden and Switzerland.