Zero bound interest rate policy and the dynamics of economic growth

Abstract

CER Comparative European Research 2016 Proceedings | Research Track of the 6th Biannual CER Comparative European Research Conference International Scientific Conference for Ph.D. students of EU countries October 24-27, 2016 | London ; The article aims to identify dependencies between the central bank's interest rate and GDP dynamics in selected economies and to highlight the risks of a zero bound interest rate policy for an economy. The hypothesis that the main interest rates and GDP dynamics in the euro area, USA and Poland are statistically significantly related to each other was confirmed. The purpose of the article was accomplished using the following methods: a review of the scientific literature, the presentation of pertinent statistical data and statistical analysis. Its findings imply that although a low cost of money can stimulate a country's economy, prolonged periods of zero bound interest rates can be a threat to economic expansion.