Łukasz Rachel, Thomas Smith, 15 January 2016

Many candidate explanations for the low level of real interest rates have been put forward. Less progress has been made on bringing together the different hypotheses into a unifying framework, on quantifying their relative importance and on predicting the future path for real interest rates. This column attempts to fill that gap, and suggests that persistent shifts to global desired savings and investment are behind the bulk of the fall in real interest rates. Those trends are unlikely to unwind anytime soon, so that the global equilibrium rate is likely to remain low, perhaps settling at or below 1% in the medium to long-run.

Carlo Favero, Vincenzo Galasso, 18 October 2015

Demographic trends in Europe do not support empirically the secular stagnation hypothesis. Our evidence shows that the age structure of population generates less long-term growth but positive real rates. Policies for growth become very important. We assess the relevance of the demographic structure for the choice between macro adjustements and structural reforms. We show that middle aged and elderly individuals have a more negative view of reforms, competitiveness and globalization than young. Our results suggest that older countries -- in terms of share of elderly people -- should lean more towards macroeconomic adjustments, whereas younger nations will be more supportive of structural reforms.

Jeffrey Frankel, 24 December 2014

Commodity prices have been falling in the US. This column argues that monetary policy has played a determining role in the falling prices trend. Monetary tightening is highly anticipated in the US, which is likely to raise short-term interest rates. At the same time, the ECB and Bank of Japan have enhanced monetary stimulus through quantitative easing. As a result, the dollar has appreciated against the euro and the yen. In this way, commodities can be down in terms of dollars and up in terms of other currencies.

Jeffrey Frankel, 29 May 2008

Low inventory levels might seem to belie the theory that soaring commodity prices are attributable to low interest rates. In this column, Jeffrey Frankel defends his argument, pointing to production decisions and cross-country comparisons.

Jeffrey Frankel, 25 March 2008

The standard story for high commodity prices is rapid growth by China, India and company. But world growth is slowing, while commodity prices still hit new highs. This column suggests that the key may be low real interest rates.