"Some Evidence on Secular Drivers of US Safe Real Rates. With the real rate, with long-run correlations that are statistically or economically large in some samples and by some measures but not in others. Most other variables have a mixed relationship In contrast to standard theory, we do not find productivity to be positively correlated with real rates. Savers who drive down real interest rates. This is consistent with standard theory where middle-aged workers are high Published in volume 1, issue 2, pages 29-54 of American Economic Journal: Macroeconomics, July 2009, Abstract: Accounting for observed fluctuations in aggregate employment, consump. For example, the long-run correlation with labor force hours growth is positive, which is consistent with overlapping generations models.įor another example, the long-run correlation with the proportion of 40 to 64 year-olds in the population is negative. Can a Representative-Agent Model Represent a Heterogeneous-Agent Economy by Sungbae An, Yongsung Chang and Sun-Bin Kim. We find that safe real interest ratesĪre correlated as expected with demographic measures. We use annual data, mostly from 1890 to 2016. The list of variables is motivated byĪn intertermporal IS equation, by models of aggregate savings and investment, and by reduced-form studies. We study long-run correlations between safe real interest rates in the United States and over 30 variables that have been hypothesized to influence real rates.
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