The Impact Of The Euro Zone’s Nominal Negative Interest Rate Policy On Economic Growth

The global financial crisis that broke out in 2008 has had an enormous impact on the euro zone and plunged its economic development into a crisis,whether it is a low economic growth rate or low inflation,poses a serious challenge to the European Central Bank.The European Central Bank,in order to reverse this situation,thus stimulating economic development,raising inflation,constantly lowering policy interest rates,that is to say,implementing low interest rate policies,the European central bank cut the overnight deposit rate to zero in July 2012,which lasted until May 2014,in the hope of boosting consumption and investment and improving foreign trade,but the situation did not seem to improve.so in June 2014 the European Central Bank began the practice of nominal negative interest rate policy,overnight deposit rate was adjusted to-0.1%,at the same time,the policy interest rate has also been lowered many times since then,which has triggered the discussion of negative interest rates among scholars.At the beginning,most of the scholars’ research on negative interest rate policy focused on qualitative research,and there was a wide divergence of views on negative interest rate policy,the analysis of the relevant issues in the field of negative interest rate policy has also been deepened,but the differences have not been resolved.Therefore,the study of negative interest rate policy is not only of relatively strong theoretical significance,moreover,it also has certain enlightenment to the actual monetary policy.This paper first sorts out the existing research on the nominal negative interest rate policy,and negative interest rate policy,as an innovative monetary policy,is increasing with the implementation time of negative interest rate policy in the euro area,it provides a certain basis for the study of negative interest rate policy.So the paper selects data from July 2014 to 2021,and studies the effects of nominal negative interest rate policies on consumption,investment,and imports and exports in the euro area by establishing a VAR model,analyzing the transmission channels of negative interest rate policy,and then studying the effects of consumption,investment,and imports and exports on the economic growth of the euro area.The results show that,in addition to its own role,consumption is the second largest contributor to economic growth in the euro area,followed by investment,while imports and exports do not contribute much.However,negative interest rates have little effect on consumption and investment,on the other hand,it has tiny effect on imports and exports.Therefore,the overall effect of the implementation of the nominal negative interest rate policy of the European central bank is not satisfactory,and the nominal negative interest rate policy has not shown certain advantages at present.Then the article analyzes the reasons why the nominal negative interest rate policy has limited effect and the related enlightenment,and analyzes the enlightenment and suggestions of other countries to our country.