Rents, Technical Change, and Risk Premia: Accounting for Secular Trends in Interest Rates, Returns to Capital, Earnings Yields

Emmanuel Farhi, Pierre-Olivier Gourinchas and Ricardo Caballero ()

No 11833, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The secular decline in safe interest rates since the early 1980s has been the subject of considerable attention. In this short paper, we argue that it is important to consider the evolution of safe real rates in conjunction with three other first-order macroeconomic stylized facts: the relative constancy of the real return to productive capital, the decline in the labor share, and the decline and subsequent stabilization of the earnings yield. Through the lens of a simple accounting framework, these four facts offer suggestive insights into the economic forces that might be at work.

Keywords: Labor share; Rents; Risk premia; Technical change; Automation (search for similar items in EconPapers)
JEL-codes: E2 E4 G1 (search for similar items in EconPapers)
Date: 2017-02
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (111)

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