سیاست های پولی در تورم منفی: دام نقدینگی در تاریخچه و عملکرد

The experience of the U.S. economy during the mid-1930s, when short-term nominal interest rates were continuously close to zero, is sometimes taken as evidence that monetary policy was ineffective and the economy was in a “liquidity trap.” Close examination of the historical policy record for the period indicates that the evidence does not support such assertions. The incomplete and erratic recovery from the Great Depression can be traced to a failure to pursue consistently expansionary policy resulting from an incorrect understanding of monetary policy in an environment of very low short-term nominal interest rates. Commonalities with the Japanese experience during the late 1990s, and the inadequacy of short-term interest rates as indicators of the stance of monetary policy are discussed and a robust operating procedure for implementing monetary policy in a low-interest-rate environment by adjusting the maturity of targeted interest-rate instruments is described.

Writing in 1930, a few months into the “slump” we now know as the Great Depression, John Maynard Keynes expressed concern that the monetary policy necessary to restore prosperity might not be forthcoming. “I repeat that the greatest evil of the moment and the greatest danger to economic progress in the near future are to be found in the unwillingness of the central banks of the world to allow the market-rate of interest to fall fast enough” (1930, p. 207). Anticipating a subsequent debate, Keynes provided a careful analysis of possible practical limits to expansionary monetary policy in a slump—what would later be called a “liquidity trap.” He dismissed the notion that monetary policy would become ineffective during a slump—provided policymakers were willing to take deliberate and vigorous action towards restoring prosperity. “Yet who can reasonably doubt the ultimate outcome [a lasting recovery]—unless the obstinate maintenance of misguided monetary policies is going to continue to sap the foundations of capitalist society?” (p. 384). Even without any real constraints on the ability of a central bank to take expansionary action, however, Keynes recognized that “the mentality and ideas” of the policymakers themselves could stand in the way of the necessary policies. His words revealed less than full confidence that the appropriate policies would be pursued. “It has been my role for the last 11 years to play the part of Cassandra … I hope that it may not be so on this occasion” (p. 385). Subsequent events, unfortunately, proved that Keynes was still a captive of Apollo’s wicked curse. In the United States, Federal Reserve policy during the 1930s is widely recognized as a dramatic failure. But it took many decades for Federal Reserve officials to accept responsibility for that failure, and, more generally, it took considerable debate over a long period of time for economists and historians to reach substantial agreement on the harm that monetary policy caused during the 1930s. While some (including Keynes himself) had little doubt regarding the unhelpful role of monetary policy, others (including, many “Keynesians”) concentrated instead on other factors, including the role of fiscal policy, especially after Keynes (1936) highlighted its potential for fighting the slump.1 The tale of the “ineffectiveness” of monetary policy to inflate the economy from a slump provided a convenient alternative explanation of events that also afforded a much less negative view of the role of monetary policy during that episode. With inflation becoming the norm in the industrialized world following World War II, monetary policy in a deflationary environment largely remained the subject of historical inquiries. But the liquidity-trap debate re-emerged in relation to developments during the 1990s in Japan, and more recently and largely based on concerns stemming from the Japanese experience, in relation to the possibility of deflation in other industrialized economies. Importantly, while the Japanese economy of the 1990s has not been through a catastrophe of a magnitude similar to that experienced in the U.S. of the 1930s, some uncomfortable similarities, especially regarding the possible role of monetary policy action or inaction, have not escaped attention.2 In this paper I revisit some of the relevant historical experience associated with the liquidity-trap debate, to reexamine one aspect of the specific question suggested by Keynes in 1930: is the liquidity trap an inescapable reality of modern capitalist economies, or is its appearance merely an artifact of “misguided monetary policies” reflecting the “unwillingness” to adopt adequate monetary policy action? The question is important, for it points to the related issue of a possible self-induced policy trap of considerable practical importance. If the liquidity trap does not represent a real difficulty, but only a perceived problem reflecting “the mentality and ideas” of policymakers, could such a perception in itself be self-fulfilling? To investigate these questions, I focus first on an historical analysis of events surrounding a specific episode during the 1930s in the United States—the recession of 1937–1938. In particular, drawing from the extensive historical policy record available for the period, I illustrate how this episode can provide some information relevant for identifying the role of “the mentality and ideas” of policymakers in inducing an appearance of a liquidity trap. The validity of the interpretation of the experience of the mid-1930s as one in which monetary policy was ineffective rests on the hypothesis that the Federal Reserve actively pursued expansionary policy during this period and that, despite such efforts, the economy failed to expand and prices failed to rise. I argue that the historical monetary-policy record is not consistent with this hypothesis. Rather, the evidence suggests that the Federal Reserve did not pursue a consistently expansionary policy. The record points to Federal Reserve unwillingness to pursue sufficient monetary expansion during much of this period and suggests that monetary-policy actions remained effective. An incorrect understanding of the economy and flawed policy, rather than monetary-policy ineffectiveness, appear to have been behind the dismal outcomes of the period. Indeed, the record confirms that Keynes’ concerns regarding the role of “the mentality and ideas” of policymakers for the adverse macroeconomic outcomes that followed were right on the mark. With the analysis of the 1930s experience in the United States serving as background, I also discuss some commonalities with the recent experience with near-zero interest rates in Japan. Key to a better understanding of incorrect assessments of monetary policy in a low-interest-rate environment is the inadequacy of the short-term rate of interest as an indicator of the stance of monetary policy under such circumstances. A central bank facing an apparent liquidity trap can adopt robust operating procedures for implementing monetary policy in a low-interest-rate environment by adjusting the maturity of targeted interest-rate instruments. Drawing on the recent Japanese experience as an example, I describe how such a procedure may be phased in as a natural extension of an operating procedure that targets the overnight interest rate under normal circumstances.

After identifying “the mentality and ideas” of policymakers as a possible impediment to adoption of policy actions needed to restore economic prosperity during a deflationary slump, Keynes went on to offer a “specific remedy” for the economic situation of 1930. He had little doubt that deliberate and vigorous monetary policy action could effectively control the rate of investment and avoid deflation. He also recognized that the precise degree of monetary expansion required might be hard to assess, and that it would importantly depend on how the central bank’s actions shaped expectations about the future. The remedy should come, I suggest, from a general recognition that the rate of investment need not be beyond our control, if we are prepared to use our banking systems to effect a proper adjustment of the market-rate of interest. It might be sufficient merely to produce a general belief in the long continuance of a very low rate of short-term interest. The change, once it has begun, will feed on itself. … The Bank of England and the Federal Reserve Board … should pursue bank-rate policy and open-market operations ‘a outrance’ … [t]hat is to say, they should combine to maintain a very low level of the short-term rate of interest, and buy long-dated securities … until the short-term market is saturated. (p. 386) Robust operating procedures in the spirit of Keynes can circumvent the appearance of a liquidity trap. Given the importance of effective communication and credibility of the central bank, procedures should be robust enough to overcome imperfections in a central bank’s credibility. One approach is further monetary expansion by shifting the targeted interest rate to successively longer-term instruments, when additional monetary policy easing is warranted at near-zero interest rates. This approach amounts to an incremental adaptation of targeting an overnight rate of interest. The prevalence of near-zero short-term interest rates may suggest the illusion of a liquidity trap. Fortunately, monetary policy need not be designed on the basis of such an illusion.