scholarly journals Negative Interest Rates

2020 ◽  
Vol 13 (5) ◽  
pp. 90
Author(s):  
Sarkis Joseph Khoury ◽  
Poorna C. Pal
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
Developed Countries ◽  
The United States ◽  
Regulatory Compliance ◽  
Budget Deficits ◽  
Liquidity Trap ◽  
True Nature ◽  
Economic Agents ◽  
Negative Interest Rates

Negative interest rates are an invention of monetary authorities to show that monetary activism does not have boundaries, i.e., as if there is no such thing as a liquidity trap. Their presence in the financial landscape has redefined the benefits to savers and to investors. Governments can now borrow at will without visibly adding to budget deficits. This makes negative interest borrowing an alternative to raising taxes. Banks can now achieve regulatory compliance partially at the expense of depositors. Commercial banks pay to keep money at the central bank instead of earning interest on it. This paper shows the true nature of negative interest rates and their consequences on various economic agents and performance measures, specifically on economic growth and exchange rates. In addition, this paper demonstrates that the arguments in favor of negative interest rates have been largely exaggerated based on the weight of the evidence that shows the United States, which never issued negative interest rates debt, is a leader among developed countries in terms of economic growth in a non-inflationary environment.

Negative interest rates as a monetary policy tool

2020 ◽  
Vol 26 (8) ◽  
pp. 1731-1746
Author(s):  
D.A. Artemenko ◽  
I.I. Bychkova
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Banking Sector ◽  
Developed Countries ◽  
Fund Raising ◽  
Situational Analysis ◽  
Policy Tool ◽  
Negative Interest Rates

Subject. We consider the application of negative interest rates by central banks of various countries, as a monetary policy tool. Objectives. We focus on reviewing the historical retrospect, potential risks, as well as positive and negative aspects of using negative interest rate instruments by developed countries. Methods. The study rests on the logical, systems, functional, and situational analysis, methods of grouping, and the monographic survey. Results. The use of negative interest rates as a monetary policy tool by financial regulators in various countries is a least-evil solution, which is aimed at improving the economy after the global economic crisis of 2008–2010. At present, positive and negative factors of the tools' impact on the financial sphere have been identified. In particular, the advantage is a balance between inflation and deflation, as the latter leads to a reduction in aggregate demand, an increase in unemployment, a fall in asset prices, and a slowdown in economic growth. The banking sector bears the risks of negative margin from operations involving fund-raising. The use of negative interest rates is possible, if other measures aimed at boosting economic growth are applied simultaneously. Conclusions. The findings can be used to investigate the negative interest rate instrument and evaluate its effectiveness. They can be helpful for financial market specialists.

scholarly journals How Do Budget Deficits and Economic Growth Affect Reelection Prospects? Evidence from a Large Panel of Countries

2008 ◽  
Vol 98 (5) ◽  
pp. 2203-2220 ◽  
Author(s):  
Adi Brender ◽  
Allan Drazen
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Fiscal Policy ◽  
Growth Rates ◽  
Electoral System ◽  
Developed Countries ◽  
Economic Conditions ◽  
New Democracies ◽  
Budget Deficits ◽  
Large Panel

We test whether good economic conditions and expansionary fiscal policy help incumbents get reelected in a large panel of democracies. We find no evidence that deficits help reelection in any group of countries independent of income level, level of democracy, or government or electoral system. In developed countries and old democracies, deficits in election years or over the term of office reduce reelection probabilities. Higher growth rates over the term raise reelection probabilities only in developing countries and new democracies. Low inflation is rewarded by voters only in developed countries. These effects are both statistically significant and quite substantial quantitatively. (JEL D72, E62, H62, O47)

Problems of Russia’s Integration into the Global Financial System

2015 ◽  
pp. 82-90
Author(s):  
A. Kuznetsov
Keyword(s):  
New York ◽  
Interest Rates ◽  
Financial Market ◽  
Low Income ◽  
Financial System ◽  
Developed Countries ◽  
The United States ◽  
International Investment ◽  
Short Period ◽  
Global Financial System

The author examines problems of Russia’s integration into the global financial system since early 1990s. During this short period of time Russia has turned from a net debtor into a net creditor. This is evidenced by its current net international investment position, as well as by active participation in the formation of credit resources of the key international financial institutions, particularly IMF. Still, the net investment income of Russia is negative. Such a disadvantage is explained by the difference in interest rates between payments of Russia on its external obligations and receipts as income from investments in foreign assets, mainly low-income bonds of developed countries, which form Russian international reserves. For three centuries the United Kingdom and the United States have been playing key role in the development of the global financial system. Today London and New York still operate nearly two thirds of the volume of global flows of capital in the international financial markets. Thus, as one of major economies in terms of GDP and as a resource-richest country of the world, Russia, as author argues, can rightfully claim for a more adequate share of income from the global financial intermediation. Obstacles include the lack of development of the domestic financial market and insufficient international demand for financial instruments denominated in Rubles. Russian Ruble remains a purely internal currency which practically is not used in the international trading and financial operations. At this stage, Russia’s inability to influence the basic conditions of refinancing on international capital markets, as well as the recent Western sanctions make impossible the full-scale participation of Russia in the processes of financial globalization. The author concludes that alternative way of Russia’s entry into the global financial system lays in playing the key role in the creation of the regional financial market of the Eurasian Economic Space.

scholarly journals Global Outlook for 2018: Economy, Finance, and Monetary, with a Particular Case Study of Taiwan

2018 ◽  
Vol 10 (3) ◽  
pp. 133 ◽  
Author(s):  
Shyi-Min Lu
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Interest Rates ◽  
Global Economy ◽  
Average Rate ◽  
The United States ◽  
Gdp Growth ◽  
Advanced Economies ◽  
Global Economic Growth

In October 2017, IMF President Christine Lagarde declared that the GDP growth of world’s economies in the first half of 2017 was up to the broadest recovery since 2010. So far, the strength of global economic growth has been enhancing. The interest rates and inflation are still at a low level. The global economy has risen from the bottom in 2016 to reach its peak since 2011. As for the degree of economic development, the emerging markets grew fastest, followed by the developing countries, while the advanced economies grew moderately at an average rate around 2%. Manufacturing PMI in major countries, such as the United States, China, the Eurozone, and even Taiwan, have increased above 50 notably in the recent years, while the non-manufacturing PMI is also above 50. Accordingly, the main purpose of this paper is to forecast the global economy in 2018, which is on the trajectory of booming with a certain degree of uncertainty. A particular case study of Taiwan’s overall economic development is presented as well.

Peak Car Travel in the United States: Two-Decade-Long Phenomenon at the State Level

2015 ◽  
Vol 2531 (1) ◽  
pp. 36-44 ◽  
Author(s):  
Timothy J. Garceau ◽  
Carol Atkinson-Palombo ◽  
Norman Garrick
Keyword(s):  
United States ◽  
Economic Growth ◽  
State Level ◽  
Developed Countries ◽  
The United States ◽  
The State ◽  
Economic Consequences ◽  
National Scale ◽  
Peak Car ◽  
Car Travel

Peak car travel is an international phenomenon that became evident in the United States on a national scale in 2004. Potentially related to peak car travel is the decoupling of economic growth from driving levels. A wealth of research has addressed these phenomena on a national scale in the United States and other developed countries. Yet few studies have been undertaken on other geographic scales, especially the statewide scale in the United States. This study investigated U.S. state-level driving and economic patterns from 1980 to 2011 to understand occurring changes. The research results showed that peak car travel first occurred at the state level as early as 1992 in Washington State, whereas another 10 states peaked in 2000. By 2011, 48 of the 50 states had peaked. The longevity of this phenomenon at the state level provided evidence that peak car travel in the United States was a more permanent phenomenon than previously thought. In addition, the decoupling of economic growth from driving was evident at the state level. In the 1980s, these indicators were positively correlated at the state level. A significant change occurred by the 2000s, however, when any significant connection ceased for most states. For four of the earliest peak car travel states, the relationship between economic growth and driving turned negative. This finding showed that decreases in driving were not associated with negative economic consequences. Rather, in several states, driving reductions were now associated with increased, rather than decreased, economic growth.

scholarly journals The Ricardian Approach to Budget Deficits

1989 ◽  
Vol 3 (2) ◽  
pp. 37-54 ◽  
Author(s):  
Robert J Barro
Keyword(s):  
Interest Rates ◽  
The United States ◽  
Alternative Theory ◽  
Budget Deficits ◽  
Large Current ◽  
Time Period ◽  
Ricardian Approach ◽  
David Ricardo ◽  
Harmful Effects ◽  
The U.S

In recent years there has been a lot of discussion about U.S. budget deficits. Many economists and other observers have viewed these deficits as harmful to the U.S. and world economies. The supposed harmful effects include high real interest rates, low saving, low rates of economic growth, large current-account deficits in the United States and other countries with large budget deficits, and either a high or low dollar (depending apparently on the time period). This crisis scenario has been hard to maintain along with the robust performance of the U.S. economy since late 1982. Persistent budget deficits have increased economists' interest in theories and evidence about fiscal policy. At the same time, the conflict between standard predictions and actual outcomes in the U.S. economy has, I think, increased economists' willingness to consider approaches that depart from the standard paradigm. In this paper, I will focus on the alternative theory that is associated with the name of David Ricardo.

The Generalized System of Preferences of the United States: Does It Promote Industrialization and Economic Growth in Least Developed Countries?

2008 ◽  
Vol 1 (1) ◽  
Author(s):  
Caf Dowlah
Keyword(s):  
United States ◽  
Economic Growth ◽  
Market Access ◽  
Developed Countries ◽  
The United States ◽  
Primary Objective ◽  
Less Developed Countries ◽  
Least Developed Countries ◽  
Generalized System ◽  
Generalized System Of Preferences

The Generalized System of Preferences (GSP)—a system of differential and favorable trade arrangements toward less developed countries, adopted by the General Agreement on Tariff and Trade (GATT)—has been around since the early 1970s. A primary objective of these schemes has been to promote industrialization and economic growth in less developed countries through trade rather than aid. The outcome of such programs has, however, been mixed. This paper identifies some of the underlying political and economic dynamics which led to the dismal performance of the GSP schemes of the United States in respect to the industrialization and economic growth of the Least Developed Countries (LDCs). The paper suggests that the effectiveness of GSP schemes could be significantly improved if they were brought under the binding WTO rules, if greater resources were directed to removing supply constraints in the LDCs, and if developed countries granted unwavering market access to LDC exports.

Financial Liberalization, Crises, and Economic Growth

2008 ◽  
Vol 7 (1) ◽  
pp. 106-115
Author(s):  
Inkoo Lee ◽  
Jong-Hyup Shin
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
Financial Liberalization ◽  
Probit Model ◽  
Developed Countries ◽  
Sample Group ◽  
Panel Model ◽  
Catching Up ◽  
Nominal Interest Rates ◽  
The Developed Countries

The paper computes the effect of financial liberalization on economic growth by combining the results of a panel model with those of a probit model. It finds a positive net effect from financial liberalization to growth. Surprisingly, we find that the net effect on growth is larger in the crisis-experienced country group than in the overall sample group. Our guess is that the crisis-experienced countries are mostly developing countries that usually enjoy higher growth rates than the developed countries because of the catching-up phenomenon. The paper also studies the link between financial liberalization and nominal interest rates, and finds, contrary to expectations, that the direct liberalization effect is positive. Our guess is that this reflected the overshooting of interest rates after crises.

scholarly journals Exploring Women's Entrepreneurship and Poverty: Necessity versus Opportunity Motivations

2020 ◽  
Vol 27 ◽  
Author(s):  
Simone Hall
Keyword(s):  
United States ◽  
Economic Growth ◽  
Developed Countries ◽  
The United States ◽  
New Venture ◽  
Opportunity Entrepreneurship ◽  
Business Opportunity ◽  
Necessity Entrepreneurship ◽  
Entrepreneurial Activities ◽  
The Relationship

What is the relationship between entrepreneurship, economic growth, and poverty? Women choose to become entrepreneurs or self-employed for different reasons in developed countries such as the United States and Sweden, with varying effects on poverty and economic growth. This paper explores the motivations behind entering the entrepreneurial space for women, differentiating between opportunity (taking actions to create a new venture following a perceived business opportunity despite other options to earn a living) and necessity (becoming involved in entrepreneurial activities due to a lack of other options to earn a living) motivations. It also highlights entrepreneurship's relationship with poverty and economic growth, while providing recommendations on how to encourage opportunity entrepreneurship and reduce poverty while discouraging necessity entrepreneurship.

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