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The natural interest rate in China

Daniel Rees and Guofeng Sun

No 949, BIS Working Papers from Bank for International Settlements

Abstract: We estimate the natural interest rate in China. The natural interest rate averaged between 3 and 5 per cent between the late 1990s and 2010, but declined over the next decade to around 2 per cent. We attribute around two-thirds of the decline in China's natural interest rate to a lower rate of potential output growth. As the decline in the natural interest rate in China mirrors that observed in many other economies, it is possible that global factors explain part of the decline in the natural rate not explained by lower growth.

Keywords: real interest rate; natural interest rate; monetary policy (search for similar items in EconPapers)
JEL-codes: E32 E40 E44 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2021-06
New Economics Papers: this item is included in nep-cna, nep-mac and nep-mon
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