Yesterday, I participated in a Brookings Conference on negative interest rates. My talk is the first 20 minutes of the video above. My talk is followed by a panel discussion between Ben Bernanke, Narayana Kocherlakota, Beth Hammack and Jamie McAndrews, moderated by the redoubtable David Wessel, is above. And you can find the rest of the information for the conference and a video of the morning session at this link for the website pictured below.
In the morning session, I raised my hand to challenge the idea legal obstacles were likely to prevent central banks from instituting a robust negative interest rate policy. My coauthor, Ruchir Agarwal challenged Torsten Slok for claiming confidence had declined as a result of negative interest rates without having any measure of confidence other than the international capital flows that would result from an interest rate cut even in the absence of any fall in confidence. In discussions with Torsten between the morning and afternoon session, I was suggesting that minute-by-minute analysis around negative rate announcements of inflation expectations from market prices would tell if the markets had some confidence that the ECB’s moves to lower rates would raise inflation over the next few years as the ECB intends.
Ruchir and I had many other great interactions with participants. There were quite a few current and former central bankers from abroad who are as eminent for their own central banks as Ben Bernanke and Narayana Kocherlakota are for the Fed. The two of us hope to highlight some of their presentations in future posts.
Last Friday, I gave an 80-minute talk at the IMF, European Division. Here is the most recent version of the 80-minute “Enabling Deeper Negative Rates by Managing the Side Effects of a Zero Paper Currency Interest Rate.”