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Rents, Technical Change, and Risk Premia Accounting for Secular Trends in Interest Rates, Returns on Capital, Earning Yields, and Factor Shares

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

American Economic Review, 2017, vol. 107, issue 5, 614-20

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.

JEL-codes: D92 E22 E25 E43 G31 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/aer.p20171036
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