Negative nominal interest rate as an optimal monetary policy in a cash-in-advance economy
Date
2019-07
Authors
Quintana Aguilar, Gand Derry
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Kawamura, Enrique
Journal Title
Journal ISSN
Volume Title
Publisher
Universidad de San Andrés. Departamento de Economía
Abstract
A raíz de la crisis financiera del año 2008, varios bancos centrales fijaron sus tasas de política monetaria por debajo de cero. Para junio de 2016, aproximadamente un tercio de los bonos de gobierno con grado de inversión en el mundo cotizaban a rendimientos nominales negativos. En este documento, evalúo la optimalidad de dicha política monetaria para una economía Cash-In-Advance añadiendo un límite superior exógeno a las tenencias de dinero fiduciario. Para dicho propósito, es útil tener en cuenta que el supuesto de cota superior está relacionado con la cantidad máxima de depósitos asegurados en el sistema financiero. En última instancia, encuentro que, en algunos casos, las tasas de interés nominales negativas pueden ser óptimas en un contexto de equilibrio general, dada la solución de “segundo mejor” implementada en un plan de Ramsey.
In the wake of the 2008 financial crisis, several central banks set their monetary policy rates below zero. By June 2016, approximately one-third of investmentgrade government bonds in the world traded at nominal negative yields. In this paper, I assess the optimality of such monetary policy for a cash-in-advance economy with an exogenous upper bound to fiat money holdings. For our purposes, it is helpful to note that my assumptions are related to the maximum amount of insured deposits. Ultimately, I find that, in some cases, negative nominal interest rates can be optimal in a general equilibrium, given the second-best solution implemented in a Ramsey plan.
In the wake of the 2008 financial crisis, several central banks set their monetary policy rates below zero. By June 2016, approximately one-third of investmentgrade government bonds in the world traded at nominal negative yields. In this paper, I assess the optimality of such monetary policy for a cash-in-advance economy with an exogenous upper bound to fiat money holdings. For our purposes, it is helpful to note that my assumptions are related to the maximum amount of insured deposits. Ultimately, I find that, in some cases, negative nominal interest rates can be optimal in a general equilibrium, given the second-best solution implemented in a Ramsey plan.
Description
Fil: Quintana Aguilar, Gand Derry. Universidad de San Andrés. Departamento de Economía; Argentina.
Keywords
Citation
Quintana Aguilar, G. D. (2019). Negative nominal interest rate as an optimal monetary policy in a cash-in-advance economy. [Tesis de maestría, Universidad de San Andrés. Departamento de Economía]. Repositorio Digital San Andrés. http://hdl.handle.net/10908/17096