The Impact Of Negative Nominal Interest Rates On Asset Prices

Since the 1980 s,under the catalysis of underlying factors such as population aging,global interest rates have generally entered a downward range and have entered an era of low interest rates.One of the important features is that some countries and economies have adopted nominal negative interest rates as monetary policy adjustments.Therefore,the international negative interest rate environment has gradually formed and may exist for a long time.As an emerging monetary policy,negative interest rates have had a severe impact on the economy’s own macroeconomic variables and asset pricing mechanisms,and may affect the overall economic stability.Therefore,under the background of increasing downward pressure on interest rates in my country,it is necessary to analyze and study the transmission mechanism and implementation effect of the nominal negative interest rate policy,so as to better grasp the details of the formulation and implementation of the interest rate policy,and inspire relevant industries to make positive adjustments.To enhance our country’s ability to respond to extreme economic situations.Using the data from September 2004 to November 2021,this paper analyzes the impact of the negative interest rate policy in the euro area with the help of the TVP-SV-VAR model,and observes the impact of negative interest rates on various variables in different stages of historical development to find out whether there is a clear distinction between the deduction paths at the time of key events,in order to judge their stimulating effects on asset prices and policy objectives.Based on this,this paper draws four conclusions:(1)Negative interest rates have multi-channel effects on asset prices and policy objectives,mainly through central bank channels,commercial bank channels,investment expectation channels,wealth channels and corporate lending channels.And influence policy objectives through credit channels,investment channels,wealth channels,expected channels,foreign exchange channels and capital flow channels.(2)The impact effect of the negative interest rate policy has obvious time-varying characteristics,and the short-term stimulus effect is obvious,but it gradually turns from strong to weak after 5-10 months of policy implementation,and due to the lack of a perfect exit mechanism,the euro area cannot get rid of the nominal negative interest rate environment in the short term.(3)Negative interest rates have a differential impact on the yields of sovereign bonds of different maturities,and the impact of their changes is gradually transmitted from short-term bonds to medium-and long-term bonds.(4)The impact of negative interest rates on the stock market is not obvious,mainly reflected in short-term positive shocks.There are two innovations in this paper:(1)From the perspective of the interaction between assets in the negative interest rate environment,the structural transmission mechanism of the impact of negative interest rates on bonds of different maturities in the euro area is discovered.(2)From the perspective of policy implementation experience,it confirms the time-varying characteristics of the effect of negative interest rate policy in the euro area,and points out that its vulnerability is also increasing.Finally,this paper gives the corresponding strategic planning and asset allocation suggestions based on the development status of China’s asset management industry.