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Understanding Global Trends in Long-run Real Interest Rates

Author

Listed:
  • Kei-Mu Yi
  • Jing Zhang
Abstract
The authors explore trends in long-run real interest rates and their underlying factors for the 20 largest economies from the 1950s through the present day. {{p}}Real, or inflation-adjusted, interest rates may well be the most important prices for any nation?s economy. They govern intertemporal purchasing decisions facing households, firms, and all levels of government. That is, virtually all interactions in the marketplace that entail making a choice between spending now and spending later necessarily involve real interest rates, which specify the real cost of borrowing to make a purchase or, on the flip side, the real gain from saving.

Suggested Citation

  • Kei-Mu Yi & Jing Zhang, 2017. "Understanding Global Trends in Long-run Real Interest Rates," Economic Perspectives, Federal Reserve Bank of Chicago, issue 2, pages 1-20.
    • Handle: RePEc:fip:fedhep:00024
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    References listed on IDEAS

    as
    1. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
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    Cited by:

    1. Matthew O'Donnell & Aleksandar Vasilev, 2024. "How do interest rates effect consumption in the UK?," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 67(3), pages 1-41.
    2. Nasir, Muhammad Ali, 2021. "Zero Lower Bound and negative interest rates: Choices for monetary policy in the UK," Journal of Policy Modeling, Elsevier, vol. 43(1), pages 200-229.
    3. Campbell, Jeffrey R. & Ferroni, Filippo & Fisher, Jonas D.M. & Melosi, Leonardo, 2019. "The limits of forward guidance," Journal of Monetary Economics, Elsevier, vol. 108(C), pages 118-134.
    4. Bassetto, Marco & Cui, Wei, 2018. "The fiscal theory of the price level in a world of low interest rates," Journal of Economic Dynamics and Control, Elsevier, vol. 89(C), pages 5-22.
    5. Karel Brůna & Jiří Pour, 2023. "Population aging and structural over/underinvestment," Economic Change and Restructuring, Springer, vol. 56(4), pages 2339-2383, August.
    6. Jiří Pour, 2020. "Analýza relativní přeinvestovanosti či podinvestovanosti ekonomik na panelových datech 122 zemí světa [Analysis of Relative Over-investment and Under-investment of Economies on Panel Data for 122 C," Politická ekonomie, Prague University of Economics and Business, vol. 2020(3), pages 290-321.

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    Keywords

    productivity; Interest rates;

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