Demographics could explain entire drop in real rate – Fed paper

federal reserve
The US Federal Reserve

A "dramatic demographic transition" affecting the US can explain a large chunk of the decline in long-run real interest rates, authors from the US Federal Reserve have found.

In a working paper, Etienne Gagnon, Benjamin Johannsen and David Lopez-Salido find the ageing population accounts for a 1.25 percentage point decline in the real rate, which on some estimates accounts for the entire drop in recent years.

They base their results on an overlapping generation model, calibrated to account for

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Central Banking? View our subscription options

Register for Central Banking

All fields are mandatory unless otherwise highlighted

This address will be used to create your account

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account

.