IDEAS home Printed from https://ideas.repec.org/a/hmm/journl/v7y2017i4p27-36.html
   My bibliography  Save this article

Negative interest rates - Absolute despair improvises the economy

Author

Listed:
  • NEGREPONTI-DELIVANIS, Maria

Abstract

This article deals with a timely issue, the recent EU decision to implement an unprecedented economic measure. This consists of the application of negative interest rates on bank deposits, which in principle represents an incomprehensible measure for economists. In particular, European citizens, who will put their savings in commercial European banks, not only will not be rewarded with a positive interest rate, as was the rule until now, but they will have to pay a negative interest to the banks for safeguarding their money. This incredible measure abolishes the quintessence of savings and causes turmoil and an unprecedented review of the entire monetary theory and policy, as well as the content of basic concepts and principles of economic science. It is a measure of despair and improvisation, moving away from the fundamentals of the economy and trying to overcome the failure of low and very low interest rates to yield the desired results, i.e. the revitalization of the European economy. This paradox measure is an extension of the famous statement by Mario Draghi, the ECB president, on January 2016, that "there are no limits" to what he will do in order to achieve the objectives he has set for his term. The ECB is the first bank implementing this measure for a year already. It is therefore necessary to investigate the meaning, the causes and consequences of this European absurdity.

Suggested Citation

  • NEGREPONTI-DELIVANIS, Maria, 2017. "Negative interest rates - Absolute despair improvises the economy," Holistic Marketing Management Journal, Holistic Marketing Management, vol. 7(4), pages 27-36, December.
  • Handle: RePEc:hmm:journl:v:7:y:2017:i:4:p:27-36
    as

    Download full text from publisher

    File URL: http://holisticmarketingmanagement.ro/RePEc/hmm/v7i4/4.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lukasz Rachel & Thomas Smith, 2015. "Secular Drivers of the Global Real Interest Rate," Discussion Papers 1605, Centre for Macroeconomics (CFM).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Coen Teulings, 2016. "Editor's Choice Are Bubbles Bad? Is a Higher Debt Target for the Eurozone Desirable?," CESifo Economic Studies, CESifo Group, vol. 62(2), pages 197-209.
    2. Jerome H. Powell, 2017. "Low Interest Rates and the Financial System : a speech at the 77th Annual Meeting of the American Finance Association, Chicago, Illinois, January 7, 2017," Speech 931, Board of Governors of the Federal Reserve System (U.S.).
    3. Agarwala, Matthew & Burke, Matt & Klusak, Patrycja & Mohaddes, Kamiar & Volz, Ulrich & Zenghelis, Dimitri, 2021. "Climate Change And Fiscal Sustainability: Risks And Opportunities," National Institute Economic Review, National Institute of Economic and Social Research, vol. 258, pages 28-46, November.
    4. Federico Barbiellini Amidei & Matteo Gomellini & Paolo Piselli, 2018. "The contribution of demography to Italy's economic growth: a two-hundred-year-long story," Questioni di Economia e Finanza (Occasional Papers) 431, Bank of Italy, Economic Research and International Relations Area.
    5. Arteta,Carlos & Kose,Ayhan & Stocker,Marc & Taskin,Temel, 2016. "Negative interest rate policies : sources and implications," Policy Research Working Paper Series 7791, The World Bank.
    6. Gianluca Benigno & Luca Fornaro, 2018. "Stagnation Traps," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(3), pages 1425-1470.
    7. Mite Miteski & Magdalena Petrovska & Рртан Сулејмани, 2023. "Measuring the natural interest rate for the Macedonian economy: a multi-model approach," Working Papers 2023-02, National Bank of the Republic of North Macedonia.
    8. Giuseppe Ferrero & Marco Gross & Stefano Neri, 2019. "On secular stagnation and low interest rates: Demography matters," International Finance, Wiley Blackwell, vol. 22(3), pages 262-278, December.
    9. Stefan Behrendt, 2017. "Low Long-Term Interest Rates - An alternative View," Jena Economics Research Papers 2017-001, Friedrich-Schiller-University Jena.
    10. Òscar Jordà & Alan M. Taylor, 2019. "Riders on the Storm," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    11. Tomas Reichenbachas & Linas Jurkšas & Rokas Kaminskas, 2021. "Natural real rates of interest across Euro area countries: Are R-stars getting closer together?," Bank of Lithuania Discussion Paper Series 24, Bank of Lithuania.
    12. Brand, Claus & Goy, Gavin W & Lemke, Wolfgang, 2020. "Natural rate chimera and bond pricing reality," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224546, Verein für Socialpolitik / German Economic Association.
    13. Alessandro Galesi & Galo Nuño & Carlos Thomas, 2017. "The natural interest rate: concept, determinants and implications for monetary policy," Economic Bulletin, Banco de España;Economic Bulletin Homepage, issue 1/2017.
    14. Lis, Eliza & Nickel, Christiane & Papetti, Andrea, 2020. "Demographics and inflation in the euro area: a two-sector new Keynesian perspective," Working Paper Series 2382, European Central Bank.
    15. Francois Velde & Benoït Mojon & Magali Marx, 2016. "Why are real interest rates so low?," 2016 Meeting Papers 1581, Society for Economic Dynamics.
    16. Lukasz Rachel & Thomas D. Smith, 2017. "Are Low Real Interest Rates Here to Stay?," International Journal of Central Banking, International Journal of Central Banking, vol. 13(3), pages 1-42, September.
    17. Mikkel Barslund & Lars Ludolph, 2019. "Could the decrease in Belgian government debt-servicing costs offset increased age-related expenditure?," Public Sector Economics, Institute of Public Finance, vol. 43(3), pages 225-246.
    18. Andrea Caggese & Ander Pérez-Orive, 2017. "Capital Misallocation and Secular Stagnation," Finance and Economics Discussion Series 2017-009, Board of Governors of the Federal Reserve System (U.S.).
    19. Luca Fornaro & Federica Romei, 2019. "The Paradox of Global Thrift," American Economic Review, American Economic Association, vol. 109(11), pages 3745-3779, November.
    20. Corbo, Vesna & Strid, Ingvar, 2020. "MAJA: A two-region DSGE model for Sweden and its main trading partners," Working Paper Series 391, Sveriges Riksbank (Central Bank of Sweden).

    More about this item

    Keywords

    Macroeconomic policy; Negative interest rates;

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hmm:journl:v:7:y:2017:i:4:p:27-36. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Theodor Valentin Purcarea (email available below). General contact details of provider: http://holisticmarketingmanagement.ro .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.