Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154614
Authors: 
Bindseil, Ulrich
Domnick, Clemens
Zeuner, Jörg
Year of Publication: 
2015
Series/Report no.: 
ECB Occasional Paper 161
Abstract: 
In parts of the German media, with the support of a number of German economists, the ECB’s low nominal interest rate policy is criticised as unnecessary, ineffective and as expropriating the German saver. This paper provides a review of the relevant arguments. It is recalled that returns on savings are anchored to the real rate of return on capital. Good monetary policy tries to avoid being a source of disturbance in itself, and may be able to smooth the effects of temporary external shocks, but beyond that cannot structurally improve the real rate of return on capital. Against this general background, the paper critically analyses a number of recent arguments as to why low interest rate policies could actually be counterproductive. Finally, the paper reviews what can be done about the medium to long-term real rate of return on capital, which remains in any case the basic issue for the saver, focusing on the specific case of Germany. The key policies identified relate to demographics, education, labour markets, infrastructure and technology. Low growth dynamics in the coming decades and correspondingly low real rates of return on investments are not inevitable.
Subjects: 
growth
natural rate
real interest rate
zero lower bound
JEL: 
E43
E52
O40
Document Type: 
Research Report

Files in This Item:
File
Size
741.04 kB





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