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Bean, C., Broda, C., Ito, T. and Kroszner, R. (2015)Low for Long? Causes and Consequences of Persistently Low Interest Rates (CEPT-ICMB 17th Annual Report)here

Executive Summary (partial)

"The past two decades have witnessed an extraordinary decline in both short- and long-term advanced economy interest rates, from levels of around 4-6% to close to zero. Although recent falls have been associated with the financial crisis and its aftermath, the decline in yields, particularly for longer-term rates, began in the late 1990s. Moreover, the fall in yields has been associated primarily with lower real interest rates, rather than a decline in inflation expectations. Finally, the phenomenon has been widespread, and not specific to particular countries.

This report explores the underlying factors behind this decline in global real interest rates and some of the possible consequences, including for policy. While there are several competing explanations, whose effects are not easy to disentangle, our analysis of the evidence suggests that an increase in the propensity to save, driven in particular by demographic developments, is likely to have been an important contributory factor. The integration of China into global financial markets has probably resulted in additional downward pressure on global real interest rates in recent years …"


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