“Miles Kimball is an economist at the University of Michigan. I sometimes think he must be paid by the word, and he must get double when he talks about negative interest rates.” This was the introduction given by David Wessel, Director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Conference on Negative Interest Rates. The conference looked at Europe’s recent negative interest rate experiences and possible applications in the U.S.
In his presentation, Kimball identifies “two paths to deep negative interest rates. The clean approach is an electronic money system that generates a negative rate of return on paper currencies located anywhere by a depreciation mechanism, using the central bank’s power to determine exchange rates between different forms of money under its jurisdiction. The dirty approach, which is what this talk is really about, is using a variety of regulations to make it difficult to earn anything close to a zero return on any substantial amount of paper currency while maintaining paper currency officially at par relative to electronic money.”
Kimball’s presentation was referenced in two articles written by Narayana Kocherlakota, “Everything is a buy as central banks keep greasing markets” for The Economic Times and "Negative Interest Rates are Nothing to Fear" for Bloomberg View. Kocherlakota identifies ways in which negative interest rates can be used as tools to strengthen the economy.
From Miles Kimball’s Blog, Confessions of a Supply-Side Liberal, voted one of top 100 economics blogs of 2016!
- Brookings Conference on Negative Interest Rates Recap by Miles Kimball (includes video of presentation)
- “Leon Berkelman’s Report on the Brookings Conference on Negative Interest Rate Policy”
Learn more about Miles and his work here!