Macroeconomic Policy in the Face of Negative Interest Rates on the Example of Japan and the EU

In economic theory, maintaining economic stability is possible in two ways: using monetary policy and fiscal. The tools of both policies, as well as the consequences of their use, are primarily described at positive interest rates. However, against the background of continued economic instability, depressed economic growth and inflation expectations, some of central banks have implemented negative interest rate policies (NIRP) to stimulate the economy through new monetary policy instruments. Consequently, new models that take into account the specifics of NIRP are required. Although some papers are dedicated to the examination of NIRP, the majority of them provide an analysis mainly from the theoretical perspective. Therefore, the major goal of the study is to bridge this gap by conducting empirical economic research and assessing model’s future development prospects by evaluating the degree of mutual influence of fiscal and monetary policies through mathematical model analyses. We will perform primary and secondary data collection and use content and quantitative data analysis. The results of the paper may contribute to the existing knowledge on the issue becoming a base for further research and serve as a decision-making framework for the governmental officials.