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[Causes and Consequences of Low Interest Rates]
Benjamin Grosse-Rueschkamp1, Jörg Rocholl1
1European School of Management and Technology, Schloßplatz 1, 10178 Berlin, Deutschland.
Schmalenbachs Zeitschrift Fur Betriebswirtschaftliche Forschung = Schmalenbach Journal of Business Research
|November 12, 2021
Summary
Persistent low interest rates pose economic challenges. Structural capital demand and supply shifts, not monetary policy, likely drive this trend, impacting various economic sectors.
Area of Science:
- Economics
- Monetary Policy
- Financial Markets
Context:
- Sustained low nominal and real interest rates observed in developed economies.
- Intense scientific and economic debate surrounding the causes and implications of this trend.
Purpose:
- To trace the scientific debate on the causes of sustained low interest rates.
- To analyze the theoretical and empirical arguments concerning interest rate determinants.
- To discuss the economic consequences of persistently low interest rates.
Summary:
- The article examines the debate on low interest rates, arguing that structural changes in capital supply and demand offer a more convincing explanation than monetary policy.
- It analyzes the impact of low rates on monetary policy transmission, financial intermediaries, corporations, and households.
- Theoretical and empirical evidence is presented to support the findings.
Impact:
- Provides a comprehensive overview of the low-interest rate phenomenon.
- Offers insights into the transmission channels affected by low rates.
- Contributes to policy recommendations for navigating the low-interest rate environment.
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