Dynamical models for negative, stochastic or non-constant interest rate

Description

In many economies – including Europe and the United States – real (inflation-adjusted) interest rates have been negative, sometimes as much as -2% (see e.g. Stiglitz, J. (18/4/2016), Abo-Zaid and Garin 2016). And yet, as real interest rates have fallen, business investment has stagnated. European Central Bank (ECB) has stepped up its stimulus, joining the Bank of Japan and a couple of other central banks in showing that the “zero lower bound” – the inability of interest rates to become negative – is a boundary only in the imagination of conventional economists. During the talk we will present the dynamics of interest rates (see e.g. Stehlik et al. 2015 and Kisel ak et al 2016), which can both oscillate (change signs) or stay negative/positive for a mid-long term. In this talk I will explain several behavioral aspects of negative interest rates. Solutions to important issues will be provided. I will answer important questions: e.g. why negative interest rates? What shall we change in computations of financial instruments, e.g. bonds?

Period	17 Jun 2016
Event title	Sixth Conference on Numerical Analysis and Applications
Event type	Conference
Location	BulgariaShow on map