European Parliament Library

Lower for Longer :, Neutral Rates in the United States, Andrea Pescatori, Jarkko Turunen

Contributor
Abstract
We use a semi structural model to estimate neutral rates in the United States. Our Bayesian estimation incorporates prior information on the output gap and potential output (based on a production function approach) and accounts for unconventional monetary policies at the ZLB by using estimates of “shadow” policy rates. We find that our approach provides more plausible results than standard maximum likelihood estimates for the unobserved variables in the model. Results show a significant trend decline in the neutral real rate over time, driven only in part by a decline in potential growth whereas other factors (including excess global savings) matter. Neutral rates likely turned negative during the Global Financial Crisis and are expected to increase only gradually looking forward
Table Of Contents
""Cover Page""; ""Title Page""; ""Copyright Page""; ""Contents""; ""I. Introduction""; ""II. Empirical Framework""; ""III. Results""; ""A. Baseline estimates""; ""B. Results with shadow rates""; ""C. Policy stance""; ""D. Determinants""; ""IV. Conclusions""; ""Footnotes""
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (36 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781513578507

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