Negative interest rates

For an economy with underutilized resources or too low a rate of inflation the traditional prescription for monetary policy is to lower the interest rate. Central banks around the world tried to do that in response to stubbornly weak economies, bringing the overnight interest rate in many countries all the way to zero. But when that didn’t seem to be getting the job done, the Bank of Japan last week decided to go negative, charging banks 0.1% interest for excess reserves. With this step Japan now joins the Euro system, Switzerland, Denmark, and Sweden, all of whom have had negative interest rate policies in place for over a year. Here I describe how negative interest rates work, what they are intended to accomplish, and some of the limitations of using this policy to try to stimulate the economy.
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Mass Shooting Casualties Trending Up (Again)

massshoot1

Figure 1: 12 month moving average of mass shooting casualties; deaths (dark red), wounded (pink). Source: Mother Jones, GunViolenceArchive.org. for January 2016, and author’s calculations.

Update, 2/5 1:45PM Pacific: Title amended to address m4570d0n‘s pedantic comment.

Update, 2/6, 10:30AM Pacific: Reader joe argues per capita figures would be more intuitively accessible. Here is the relevant graph.

massshoot_pc

Figure 2: 12 month moving average of mass shooting casualties per million; deaths (dark red), wounded (pink). Source: Mother Jones, GunViolenceArchive.org. for January 2016, and author’s calculations.

Note: Mother Jones used a 4 death threshold for definition of mass shooting; I have used that criterion for tabulating January 2016 numbers.