Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/203200 
Year of Publication: 
2018
Series/Report no.: 
IES Working Paper No. 22/2018
Publisher: 
Charles University in Prague, Institute of Economic Studies (IES), Prague
Abstract: 
The paper focuses on the estimation of the effective lower bound for the Czech National Bank's policy rate. The effective lower bound is determined by the value below which holding and using cash would be preferable to deposits with negative yields. This bound is approximated based on storage, insurance and transportation costs of cash and the loss of convenience associated with cashless payments and complemented with the estimate based on interest charges which present direct costs to the bank profitability. Overall we get a mean value slightly below -1%, approximately in the interval (-2.0%, -0.4%). In addition, by means of a vector autoregression we show that the potential of negative rates would not be sufficient to deliver monetary policy easing similar in its effects to the impact of the Czech National Bank's exchange rate commitment during the years 2013-2017.
Subjects: 
effective lower bound
zero lower bound
negative interest rates
costs of cash
transmission of monetary policy
JEL: 
E52
E58
E43
E44
Document Type: 
Working Paper

Files in This Item:
File
Size
544.53 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.