Natural interest rate driven by productivity growth – research
Population increase also plays important role in determining metric, RBNZ paper finds
The decline of the natural rate of interest in New Zealand over the past 25 years has been mainly driven by a parallel global trend and a fall in domestic productivity growth, researchers at the country’s central bank have found.
In a discussion paper, published on May 1, scholars at the Reserve Bank of New Zealand calibrate an overlapping-generations model to analyse the decline in the country’s natural interest rate from 2000 to 2024.
The paper defines the natural interest rate as the long-run
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