Living with low for long

Charles Bean

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: I review the causes and some of the consequences of the recent decline in global real interest rates. Causes include: a higher propensity to save associated with a rise in the population share of the high-saving middle-aged; a weaker propensity to invest since the 2007-8 financial crisis; and portfolio shifts towards safer assets. Consequences include: an increased likelihood that policy rates are constrained by the zero lower bound, necessitating greater reliance on unconventional monetary policies; and an increased risk of financial instability as investors seek to generate higher yields.

JEL-codes: F3 G3 N0 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2016-05-23
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Citations: View citations in EconPapers (4)

Published in The Economic Journal, 23, May, 2016, 126(592), pp. 507 - 522. ISSN: 0013-0133

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Journal Article: Living with Low for Long (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:65803

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