Abstract:

There has been much discussion about eliminating the "zero lower bound" by eliminating paper currency. But such a radical and difficult approach as eliminating paper currency is not necessary. Much as during the Great Depression-when countries were able to revive their economies by going off the gold standard—all that is needed to empower monetary policy to cut interest rates as much as needed for economic stimulus now is to change from a paper standard to an electronic money standard, and to be willing to have paper currency go away from par.This paper develops the idea further and shows how such a mechanism can be implemented in a minimalist way by using a time-varying paper currency deposit fee between private banks and the central bank.

The paper also examines different options available to the central bank to return to par when negative interest rates are no longer needed, and the associated implications for the financial sector and debt contracts. Finally, the paper discusses various legal, political, and economic challenges of putting in place such a framework and how policymakers could addressthem.

Lecturer:

Miles Kimball, Eugene D. Eaton Jr., University of Colorado Boulder. Chair Professor and Research Professor Emeritus, University of Michigan. His research encompasses a variety of fields, including macroeconomics, microeconomics, behavioral economics, and finance. Up to now, he has published 12 papers in Top 5 journals of economics :American Economic Review (7 pieces), Econometrica (3 pieces ),Journal of Political Economy (1 pieces ), Quarterly Journal of Economics (1 pieces ).

Time: April 15 , 2024 9:00-10:30

Venue: B321,Zhixin Building,Central Campus