The Macroeconomic Consequences of Natural Rate Shocks: An Empirical Investigation

Stephanie Schmitt-Grohe and Martín Uribe

No 30337, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Much of the empirical literature on the natural rate of interest has focused on estimating its path. This paper studies the effects of natural rate shocks on output and inflation. It estimates a semi-structural model inspired by the DSGE literature. A decline in the natural rate is found to have a large negative effect on the trend of output and to be contractionary and deflationary in the short run. When the economy is constrained by the zero lower bound (ZLB), these results are consistent with the secular stagnation hypothesis. However, negative natural rate shocks are found to depress the trend of output even outside of the ZLB, calling for a more general theory of secular stagnation.

JEL-codes: E30 E4 (search for similar items in EconPapers)
Date: 2022-08
New Economics Papers: this item is included in nep-cba, nep-dge and nep-fdg
Note: EFG IFM ME
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.nber.org/papers/w30337.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:30337

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w30337

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().