Tasmanian Labor senator Helen Polley's support of negative interest rates has been met by mixed reviews.
Ms Polley said lowering Australia's official interest rate into negative territory could have broad-ranging effects, however, economist Saul Eslake and Launceston Chamber of Commerce executive officer Neil Grose are not so sure.
"Ideally, negative interest rates should spur the growth of credit; assuming banks pass on their lower interest rates to borrowers, cheaper loans should result in increased borrowing," Ms Polley said in an opinion piece for The Examiner after Australian interest rates were kept at a record-low 1 per cent last week.
"Negative interest rates also lower the interest burden on debt. This has occurred internationally once they have been imposed, however, the long-term effects over the economy are less determined." Ms Polley said more research would be required and outcomes would vary depending on economic circumstances within particular economies.
Mr Eslake said it was an open question as to whether negative interest rates had worked elsewhere in countries such as Japan, Sweden, Denmark and Switzerland.
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"It's not clear that it solved the problems that Europe or Japan had," Mr Eslake said.
"There's no consensus or agreement among economists or the central banks as to how this stuff works, and what it's longer term consequences are meant to be," he said. "It's contested territory."
Mr Eslake said there were probably more things that could go wrong than right.
"This issue comes up in circumstances where the central bank has sort-of run out of conventional ammunition. It's almost as if an army has run out of guns, and tanks, and bullets, and they say okay, what else can we use to try and fight the enemy?" he said.
Mr Grose said he did not believe negative interest rates could boost the national or Tasmanian economy.
"I wouldn't have thought on a broader macro-economic point of view that negative interest rates would be good for anything," he said.
"One of the good things that low interest rates does, is that it creates a certain amount of caution within the economy.
"Low interest rates are good if you're borrowing money, but if you're seeking to invest it, it's not so great."
The state government declined to comment and Liberal Bass MHR Bridget Archer was contacted