Interest Rates, Financial Markets, and Macroeconomics

Gilles Dufrénot
Additional contact information
Gilles Dufrénot: Sciences Po Aix

Chapter Chapter 5 in New Challenges for Macroeconomic Policies, 2023, pp 195-257 from Springer

Abstract: Abstract This chapter reviews the causes of the prolonged decline in interest rates, not only market rates, but also the long-term rate of return on capital, that is, the natural interest rate. One important aspect is the enormous idle liquidity that cannot be borrowed due to an overabundance of net savings worldwide. To understand the origin of this, we must look at consumption and investment behavior and balance of payments imbalances. But we must also mention the important role of the financial cycle on macroeconomic phenomena. For phases of sharp rate cuts generally occur after sudden reversals in financial cycles that follow long phases of rising asset prices. This chapter shows the effects of these on recessions and potential growth in the medium/long term.

Date: 2023
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:sprchp:978-3-031-15754-7_5

Ordering information: This item can be ordered from
http://www.springer.com/9783031157547

DOI: 10.1007/978-3-031-15754-7_5

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().