Selected Aspects of Negative Interest Rates
| Thesis title in Czech: | Selected Aspects of Negative Interest Rates |
|---|---|
| Thesis title in English: | Selected Aspects of Negative Interest Rates |
| Academic year of topic announcement: | 2016/2017 |
| Thesis type: | Bachelor's thesis |
| Thesis language: | angličtina |
| Department: | Institute of Economic Studies (23-IES) |
| Supervisor: | doc. Ing. Tomáš Cahlík, CSc. |
| Author: | hidden - assigned by the advisor |
| Date of registration: | 09.11.2016 |
| Date of assignment: | 09.11.2016 |
| Date and time of defence: | 15.06.2017 09:00 |
| Venue of defence: | Opletalova - Opletalova 26, O314, Opletalova - místn. č. 314 |
| Date of electronic submission: | 19.05.2017 |
| Date of proceeded defence: | 15.06.2017 |
| Opponents: | Mgr. Jan Mareš, Ph.D. |
| URKUND check: | |
| References |
| Bibliography
1. Akram, Q. F. (2009). Commodity prices, interest rates and the dollar. Energy Economics, 31(6):838–851. 2. Bech, M. L. and Malkhozov, A. (2016). How have central banks implemented negative policy rates? resreport. 3. Brunnermeier, M. K. and Koby, Y. (In Preparation). The Reversal Interest Rate: The Effective Lower Bound of Monetary Policy. 4. Denizer, C. (1989). Primary commodity prices and macroeconomic variables: A long run relationship. resreport, Center for Economics and Econometrics; World Bank 5. Rogoff, K. (2014). Costs and benefits to phasing out paper currency. resreport, Harvard University. |
| Preliminary scope of work in English |
| Research question and motivation
The steady decline in the global commodity prices reflects slowing demand as markets did not fully recover from the recession and it seems like majority of subjects in the market are rather risk-averse. This development leaves the governments and the economists despair as they are gradually exhausting their options to effectively and successfully fight against the deflation. In recent years, we are witnesses of the unconventional monetary policies practiced by several central banks and I want to study how and why they implemented policy of the negative interest rates and its influence on the commodity market. Regarding financial crisis in 2007/2008 and its causes, being skeptical about unorthodox movement of interest rates is justified, as lowering interest rates stimulates the market and encourages people to invest less “expensively” but afterwards it can find its limitations. Recent price shocks in the commodities like crude oil, gold or silver on the one hand and phenomena of the risk-averse people and the bull markets on the other can also significantly shake with this interest-sensitive market. Nevertheless, there are some people betting more on commodities due to situation in China and its resemblance with real estate market in US in years 2007-2008. Regarding some other current events such as “Brexit” together with this modern policy of NIR, examination of the connection between macroeconomic factors and the movement of the prices on the commodity market will be the core of this paper. Contribution In the last decade there have been studies about causes and consequences of loose monetary policy and unconventional measures, but mostly regarding quantitative easing. So this paper will study reaction of interest-sensitive commodity market on macroeconomic indicators and will discuss, in detail, the impact and the implications of negative interest rates policy. Moreover, the analysis will be aimed at the factors in the nominal terms rather than in the real ones to investigate the potential information it possesses. Methodology Analyzing the behavior of the commodity prices according to changes in the interest rates and inflation. Regressing prices of base commodities like gold and crude oil on the interest rate and determining the correlations inside the commodity market. Outline 1. Abstract 2. Introduction 3. Influence of negative interest rates on commodity 4. Interpretation of regression outcomes 5. Conclusion 6. Appendix |