The Impact Of Nominal Negative Interest Rate Policy On Economic Growth In The Euro Area

The outbreak of the 2008 financial crisis has kept the European economy in a downturn,with inflation below the target value of 2%and high unemployment.The euro zone is caught in a deflationary economic crisis.Therefore,the euro zone began to cut the base interest rate continuously,making the overnight deposit rate negative,achieving the inflation rate of 2%and trying to stimulate economic growth by lowering interest rates.In June 2014,the euro zone first experienced a nominal negative interest rate,which means the overnight deposit rate was-0.1%.Since the nominal negative interest rate policy is an emerging monetary policy,the academic research on nominal negative interest rate policy is generally qualitative research,and there are different opinions.Therefore,this paper uses the VAR model to quantitatively study the nominal negative interest rate policy.This paper selects the data of the Eurozone from June 2014 to September 2018,and analyzes the impact of the nominal negative interest rate policy on investment,consumption and net exports through impulse response function analysis and variance decomposition,and then analyzes investment and consumption.The impact of the three channels of net exports on economic growth.The innovation of this paper is to choose the new perspective of nominal negative interest rate policy,and use VAR model to quantitatively analyze the impact of nominal negative interest rate policy on economic growth in the euro zone.The results of this paper show that:The economic growth of the Eurozone is mainly affected by its own,and its contribution rate reached 50.46%in the tenth period.Second,the total capital formation(Ⅳ)was 22.13%.Final consumption expenditure(TC)and net export(NE)contribute less to gross domestic product(GDP),only 18.72%and 8.69%.From the impact of overnight deposit rate(R)on various economic variables,the impact of overnight deposit rate(R)on final consumption expenditure(TC)is not obvious,and final consumption expenditure(TC)has less effect on economic growth.Therefore,overnight deposit rates(R)have less effect on stimulating consumption to promote economic growth.Although the total capital formation(Ⅳ)contributes a lot to the gross domestic product(GDP),the overnight deposit rate(R)has a small contribution rate to the total capital formation(Ⅳ)in the long run,and the effect is not obvious.Explain that the channels for stimulating economic growth through total capital formation(Ⅳ)have not achieved the desired results.The overnight deposit rate(R)has a significant impact on net exports(NE)in the long run,but net exports(NE)contribute less to gross domestic product(GDP),only 8.69%.Explain that nominal negative interest rates cannot significantly stimulate economic growth through net export channels.Therefore,the nominal negative interest rate policy failed to effectively stimulate economic growth in the euro zone through consumption,investment,and net export channels.