using IS-lm framework

To address the eurozone crisis, the European Central Bank.(ECB) .adopted a negative. interest rate .policy in.2014..The.ECB.lowered its-deposit rate.to.-0.1% that year.to hold off-deflation and move.the economic.bloc out of a prolonged.recession. .Today, the.ECB deposit rate.is-.0.5%, the.lowest on record.In theory, negative rates.would.boost.the economy.by encouraging consumers.and .banks.to take.more.risks.through.borrowing and.lending money. Using the.IS-LM framework, explain why.traditional.monetary policy fails.in the presence of zero.lower.bounds, and.how the negative.interest rate policy may help the.ECB-to.bring the economy out of recession. . Page.2.of.391