With a Carrot and a Stick: The Effects of the European Central Bank’s Negative Interest Rate Policy on the Banking System

Gunther Schnabl; Nils Sonnenberg

Dezember 2021

Abstract

Gunther Schnabl and Nils Sonnenberg show that the ECB is weakening the profitability of banks while strengthening them in a way that allows it to implement policy goals with the help of commercial banks. Moreover, with the help of the negative interest rate policy, banks from the southern euro area, along with large banks that have struggled, tend to be propped up, but at the expense of banks in the northern euro area.

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Erschienen in

Austrian Institute Paper No. 40-EN/2021.

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Covid-19 and the euthanasia of interest rates: A critical assessment of central bank policy in our times

Thomas Mayer; Gunther Schnabl

Dezember 2021

Abstract

We compare the New Keynesian and Austrian explanations for low interest rates in the light of the Corona crisis. From a New Keynesian perspective low interest rates are the result of structural changes in the society and the economy as well as the cyclical downswing triggered by the Corona pandemic. In contrast, from the perspective of Austrian economic theory, interest rates have been pushed down on trend by central banks for a long time to stimulate growth, with the global financial crisis of 2007/08 and the Corona crisis of 2020 acting as powerful accelerators of the euthanasia of interest. New Keynesian theory would suggest that interest rates can be adjusted upward again when conditions change, without creating economic and financial disturbances. Against this, Austrian theory finds that central banks have backed themselves into a corner by creating persistent low-interest expectations.

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Erschienen in

Journal of Policy Modeling Volume 43, Issue 6, November–December 2021, Pages 1241-1258.

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Mit Peitsche und Zuckerbrot: Die Auswirkungen der Negativzinspolitik der EZB auf das Bankensystem

Gunther Schnabl; Nils Sonnenberg

November 2021

Abstract

Gunther Schnabl und Nils Sonnenberg erklären, wie die EZB die Profitabilität der Banken schwächt und sie gleichzeitig in einer Weise stärkt, die es ihr ermöglicht, mit Hilfe der Geschäftsbanken politische Ziele umzusetzen. Mit Hilfe der Negativzinspolitik werden Banken aus dem südlichen Euroraum wie auch Großbanken gestützt.

Erschienen in

Austrian Institute Paper Nr. 40 (2021).

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Determinants of Japanese Household Saving Behavior in the Low-Interest Rate Environment

Sophia Latsos; Gunther Schnabl

November 2021

Abstract

This paper scrutinizes the role of prolonged, expansionary monetary policy on the savings behavior of Japanese households, focusing on the dramatic change of the household savings rate since 1998, from high to low savings. The literature generally attributes this change to the country’s shift from high-growth to low-growth and its demographic change. This paper empirically examines changes in the incentives for saving and the ability to save connected to monetary policy. It finds that monetary policy had a significant impact on Japan’s household behavior via the interest rate channel and the redistribution channel but not the labor income channel. There is also evidence that rising wealth boosts savings.

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Erschienen in

The Economists’ Voice.

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Japanese monetary policy and household saving

Karl-Friedrich Israel; Tim Florian Sepp; Nils Sonnenberg

Oktober 2021

Abstract

This article analyzes the impact of monetary policy on household saving in Japan between 1993 and 2017. Using annual data from the Japan Panel Survey of Consumers it is shown that monetary expansion has contributed to a widening gap in households’ net saving through an adverse effect on the volume of saving of non-academic households. In contrast, households with at least one academic tend to be able to compensate these adverse effects of monetary expansion or can even benefit from it. The article documents how inequality in terms of the ability to build up wealth has increased in Japan over the past decades. The statistical analysis controls for household size as well as potential spatial effects in the transmission mechanism of monetary policy on household saving.

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Erschienen in

Applied Economics, 1-17.

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Auch die Konsumentenpreisinflation dürfte auf längere Zeit steigen

Gunther Schnabl, Tim Florian Sepp

September 2021

Abstract

Während sich die Wogen der Corona-Maßnahmen nur langsam glätten, ist ein neuer Unruheherd aufgetaucht. Die Inflation steigt. In den USA wurde für Juli 2021 eine Inflationsrate von 5,4 % gemeldet, für den Euroraum für August 3,0 % und für Deutschland 3,9 %. Da die Lohnabschlüsse bisher sehr zurückhaltend waren, ergibt sich daraus ein schmerzlicher Kaufkraftverlust.

Erschienen in

Wirtschaftsdienst, 101(9), 684-687.

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Niedrigzinspolitik und Sparkultur in Japan: Implikationen für die Wirtschaftspolitik

Gunther Schnabl; Tim Sepp

August 2021

Abstract

Das Papier untersucht die Veränderung der Sparkultur in Japan während mehr als 30 Jahren Niedrig-, Null- und Negativzinspolitik basierend auf einer Analyse der Allokationsfunktion von Zinsen und der Transformationsfunktion der Banken bei der Kreditvergabe. Es wird gezeigt, wie durch die anhaltend lockere Geldpolitik der Bank von Japan die Sparkultur in Japan grundlegend von einer hohen Haushaltssparquote zu einer sehr niedrigen Haushaltssparquote verändert wurde. Es werden aufbauend auf der theoretischen Literatur zu Sparmotiven Kanäle identifiziert, die das Haushalts- und Unternehmenssparen maßgeblich verändert und damit die Wachstumskräfte des Landes anhaltend geschwächt haben.

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Erschienen in

Working Paper, No. 174.

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Are Free Market Fiduciary Media Possible? On the Nature of Money, Banking, and Money Production in the Free Market Order

Kristoffer J. M. Hansen

Juli 2021

Abstract

Recent debates in monetary theory have centered on so-called free banking and the role of banks in providing money in the form of fiduciary media in a pure market economy. This paper examines how and to what extent fiduciary media can emerge in a pure market economy. Based on the theory of value, it is argued that those economists are mistaken who claim that money substitutes must in all cases be interpreted as being money titles. Those economists too are mistaken, however, who claim a large role for the circulation of fiduciary media in a pure market economy. It is argued that holding fiduciary media in one’s cash balance is an entrepreneurial error, as fiduciary media by their nature do not have the qualities people demand in holding money. Money is the comparatively most certain good and the present good par excellence, qualities that fiduciary media do not have. Holding fiduciary media instead of money is therefore an entrepreneurial error, and like all errors in the free market, it will tend to be eliminated in the process of entrepreneurial profit and loss, leading to the virtual disappearance of all fiduciary media from the market economy.

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Erschienen in

Quart J Austrian Econ (2021) 24.2:286–316.

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Inflationsziel und Inflationsmessung in der Eurozone im Wandel

Gunther Schnabl; Tim Sepp

Juli 2021

Abstract

Viele Menschen im Euroraum haben zunehmend das Gefühl, dass der allgemeine Kaufkraftverlust des Geldes sehr viel höher ist als die offiziell gemessenen Inflationsraten. So lag Umfrageergebnissen zufolge z. B. im ersten Quartal 2021 die gefühlte Inflation im Euroraum bei 4,5 %, während die offiziell gemessene Inflationsrate 1 % betrug. Das könnte daran liegen, dass Preissteigerungen subjektiv stärker wahrgenommen werden als Preissenkungen. Es kann aber ebenso gut daran liegen, wie Preisstabilität gemessen wird und wie sich die Umsetzung des Ziels der Preisstabilität durch die Europäische Zentralbank verändert hat.

JEL Codes: , .

Erschienen in

Wirtschaftsdienst, 101(8), 615-620..

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Macroeconomic Policy Making and Current Account Imbalances in the Euro Area

Taiki Murai; Gunther Schnabl

Juni 2021

Abstract

The paper analyses the role of fiscal and monetary policy for the development of the current account imbalances in the euro area, including the most recent developments during the coronavirus crisis. Several financial transmission channels such as international bank lending, changes in TARGET2 balances, international rescue credit and government bond purchases of euro area central banks are identified. It is found that differing fiscal policy stances which have interacted differently with the ECB’s monetary policy have been at roots of first diverging and then converging current account positions in the euro area. Since the European financial and debt crisis, public financing mechanisms and the unconventional monetary of the ECB have contributed to the persistence of intra-euro area current account imbalances.

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Erschienen in

CESifo Working Paper No. 9153.

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