Riders on the Storm

Oscar Jorda and Alan Taylor

No 2019-20, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: Interest rates in major advanced economies have drifted down and in greater unison over the past few decades. A country?s rate of interest can be thought of as reflecting movements in the global neutral rate of interest, the domestic neutral rate, and the stance of monetary policy. Only the latter is controlled by the central bank. Estimates from a state space New Keynesian model show that central bank policy explains less than half of the variation in interest rates. The rest of the time, the central bank is catching up to trends dictated by productivity growth, demography, and other factors outside of its control.

JEL-codes: E43 E44 E52 E58 F36 N10 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2019-09-06
New Economics Papers: this item is included in nep-his, nep-mac and nep-mon
Note: Presented at the Federal Reserve Bank of Kansas City Economic Policy Symposium “Challenges for Monetary Policy,” Jackson Hole, Wyoming, August 22–24, 2019.
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Journal Article: Riders on the Storm (2019)
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Working Paper: Riders on the Storm (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:2019-20

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DOI: 10.24148/wp2019-20

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