Nominal interest rate policy rules and the feasibility of real interest rate control

As long as all interest rates move in tandem – including the rate of return on paper currency – economic theory suggests no important difference between interest rate changes in the positive region and interest rate changes in the negative region. Indeed, in standard models, only the real interest rate and spreads between real interest rates matter. Thus, in most respects, negative interest rate policy is conventional. It is only (a) what needs to be done with paper currency, (b) difficulties in understanding negative rates or (c) institutional features interacting with negative rates that make negative interest rate policy unconventional.

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The methodology for assessing interest-rate policy rules: some comments

European Journal of Economics and Economic Policies Intervention ◽

10.4337/ejeep.2021.03.02 ◽

2021 ◽

Vol 18 (3) ◽

pp. 275-285

Author(s):

Martin Watts

Keyword(s):

Interest Rate ◽

Interest Rate Rules ◽

Policy Rules ◽

Interest Rate Policy ◽

Modelling Framework ◽

Rate Policy ◽

Macroeconomic Impacts ◽

Conceptual Foundations ◽

The Impact

This paper is critical of the conceptual foundations and methodology adopted by Smithin (2020) in his exploration of the impact of different interest-rate policy rules on inflation. His modelling framework is too narrow to adequately discriminate between different interest-rate rules in terms of their broader macroeconomic impacts.

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The methodology for assessing interest-rate policy rules: a reply

European Journal of Economics and Economic Policies Intervention ◽

10.4337/ejeep.2021.03.03 ◽

2021 ◽

Vol 18 (3) ◽

pp. 286-292

Author(s):

John Smithin

Keyword(s):

Interest Rate ◽

Policy Rules ◽

Interest Rate Policy ◽

Zero Interest Rate Policy ◽

Rate Policy ◽

Conceptual Foundations ◽

The Impact

This note is a brief reply to Watts (2021), who has been critical of the conceptual foundations and methodology in a discussion of the impact of different interest rate policy rules on inflation in Smithin (2020). The reply concludes that the case for a ‘zero real policy rate of interest’ (ZRPR), rather than a ‘zero interest rate policy’ (ZIRP), emerges unscathed.

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Analysis of the Bank of Russia information policy

Voprosy Ekonomiki ◽

10.32609/0042-8736-2017-10-88-110 ◽

2017 ◽

pp. 88-110 ◽

Cited By ~ 1

Author(s):

S. Drobyshevsky ◽

P. Trunin ◽

A. Bozhechkova ◽

E. Gorunov ◽

D. Petrova

Keyword(s):

Interest Rate ◽

Nonparametric Tests ◽

Information Policy ◽

Var Models ◽

New Approach ◽

Interest Rate Policy ◽

News Reports ◽

Internet Users ◽

Rate Policy ◽

Exchange Markets

The article investigates the Bank of Russia information policy using a new approach to measuring information effects on Russian data, including the analysis of the tonality of news reports, as well as internet users’ queries on Google. The efficiency of regulator’s information signals is studied using EGARCH-, VAR- models, as well as nonparametric tests. The authors conclude that the regulator communicates effectively in terms of the predictability of interest rate policy, the degree to which information signals affect the money and foreign exchange markets.

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