Concluding Remarks on the Negative Natural Rate of Interest

Carl Christian von Weizsäcker () and Hagen Krämer
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Carl Christian von Weizsäcker: Max Planck Institute for Research on Collective Goods

Chapter Chapter 8 in Saving and Investment in the Twenty-First Century, 2021, pp 225-245 from Springer

Abstract: Abstract The Great DivergenceGreat divergence: ThePeriod of production period of production T is not rising anymore. The “waiting periodWaiting period” Z is rising over time with the rising standard of living and rising life expectancyLife expectancy, and this is the case worldwide. In the interest of full employment, the public debt periodPublic debt period D has to compensate for this divergence: T = Z − D. Using an extrapolation procedure that we have developed and the available empirical data, we calculate total private wealthWealth, private in the OECD plus ChinaChina region. Net public debt already accounts for nearly half of private wealth today. COVID-19Covid-19 increases the optimal steady-stateSteady state public debt periodPublic debt period. Both our theory and our empirical findings are increasingly confirmed by the work of other economists: for example, by Lawrence Summers’[aut]Summers, Lawrence secular stagnationSecular stagnation thesis and by the study of Jordà[aut]Jordà, Òscar, Schularick[aut]Schularick, Moritz and others on the secular evolution of private wealthWealth, private.

Date: 2021
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DOI: 10.1007/978-3-030-75031-2_8

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