An Early Experiment with "Permazero"

57 Pages Posted: 28 May 2017 Last revised: 29 Nov 2017

See all articles by Stephen Quinn

Stephen Quinn

Texas Christian University - Department of Economics

William Roberds

Federal Reserve Bank of Atlanta

Date Written: 2017-05-01


We investigate a monetary regime with persistent, near-zero policy interest rates ("permazero" in the terminology of Bullard 2015). This regime was implemented in 1683 by a prominent early central bank called the Bank of Amsterdam ("Bank"). The Bank fixed its policy rate at one-half percent and held it unchanged for more than a century. Maintaining the rate helped stabilize the value of Bank money. We employ archival data to reconstruct the Bank's activities during a portion of that interval (1736–91) for which data are most readily available. The data suggest that "permazero" worked well for long periods because the Bank counteracted market swings with quantitative operations. These same data show how fiscal exploitation denied the Bank sufficient resources to stabilize large shocks, with adverse results.

Keywords: central banks, monetary policy, zero lower bound

JEL Classification: E58, E65, N13

Suggested Citation

Quinn, Stephen and Roberds, William, An Early Experiment with "Permazero" (2017-05-01). FRB Atlanta Working Paper No. 2017-5, Available at SSRN:

Stephen Quinn (Contact Author)

Texas Christian University - Department of Economics ( email )

Fort Worth, TX 76129
United States

William Roberds

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States
404-498-8970 (Phone)
404-498-8956 (Fax)

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