R* has increased globally since pandemic – NY Fed research
Higher neutral rates show government bonds might not be as liquid and safe as before, economists say
Neutral interest rates, or r*, across advanced economies have risen since the Covid-19 pandemic, researchers at the Federal Reserve Bank of New York have found.
In a blog post published on February 25, NY Fed economists Marco Del Negro, Elena Elbarmi and Michael Pham explore changes in r* in 18 advanced economies across North America, Europe and Asia between 2019 and 2024.
R* refers to the rate of interest that neither stimulates nor constrains economic growth.
Using a “trendy vector autoregression
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