The Transmission of Negative Interest Rates in the Euro Area [védés előtt]

Kivonat, rövid leírás

In July 2022 the European Central Bank closed the eight years long era of negative nominal interest rates, which provides an opportunity for the evaluation of the negative interest rate policy. The assessment of this unprecedented new monetary policy tool is rather controversial in the economic literature. My doctoral research focuses on the interest rate channel of the monetary transmission mechanism in Euro Area economies. With error correction and vector autoregressive models, I study how negative interest rates are transmitted into commercial bank rates. The results show that transmission through the interest rate channel changes in Eurozone countries when interest rates sink into negative territory. The outcomes of the error correction and vector autoregressive models also suggest that the interest rate channel of the monetary transmission mechanism weakens when interest rates become negative. In terms of interest rate transmission, considerable differences are identified across Euro Area member states. Finally, the research also confirms that monetary transmission through the interest rate channel is less effective in the household sector than in the corporate sector. The novelty of the dissertation lies in its narrow focus on the first step of the transmission mechanism, the pass-through to commercial bank interest rates, and in the geographical extension of the analysis to all Euro Area member states.