Tuesday , April 1 2025
Home / Thomas Palley: Economics for Democratic and Open Societies / Negative interest rate policy (NIRP) and the fallacy of the natural rate of interest: Why NIRP may worsen Keynesian unemployment

Negative interest rate policy (NIRP) and the fallacy of the natural rate of interest: Why NIRP may worsen Keynesian unemployment

Summary:
NIRP has quickly become a consensus policy within the economics establishment. This paper argues that consensus is dangerously wrong, resting on flawed theory and flawed policy assessment. Regarding theory, NIRP draws on fallacious pre-Keynesian classical economic logic that asserts there is a natural rate of interest which can ensure full employment. That pre-Keynesian logic has ...

Topics:
Thomas Palley considers the following as important:

This could be interesting, too:

Stavros Mavroudeas writes CfP of Marxist Macroeconomic Modelling workgroup – 18th WAPE Forum, Istanbul August 6-8, 2025

Lars Pålsson Syll writes The pretence-of-knowledge syndrome

Dean Baker writes Crypto and Donald Trump’s strategic baseball card reserve

Lars Pålsson Syll writes How economists forgot the real world

NIRP has quickly become a consensus policy within the economics establishment. This paper argues that consensus is dangerously wrong, resting on flawed theory and flawed policy assessment. Regarding theory, NIRP draws on fallacious pre-Keynesian classical economic logic that asserts there is a natural rate of interest which can ensure full employment. That pre-Keynesian logic has [...]
Thomas Palley
Dr. Thomas Palley is an economist living in Washington DC. He holds a B.A. degree from Oxford University, and a M.A. degree in International Relations and Ph.D. in Economics, both from Yale University.

Leave a Reply

Your email address will not be published. Required fields are marked *