Central bankers Thomas Laubach and John C. Williams show that the natural rate of interest has sunk to a new – and possibly enduring – low.
Are low interest rates the new normal? In this provocative report, central bankers Thomas Laubach and John C. Williams suggest that the natural rate of interest – the rate that prevails when national output is at its potential – has moved to a permanently low level. Though their study doesn’t take into account structural changes that could hike GDP, such as the impact of new technologies, their model lays out a strong case for an ongoing low-interest rate environment. getAbstract suggests that economists, investors and policy makers read this informative, topical report.
In this summary, you will learn
- What the natural rate of interest is and why it is important
- How the natural rate of interest has evolved since 1980
- What that evolution implies for monetary policy
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