Low productivity might not be weighing on real rates – research

cleveland-federal-reserve
Federal Reserve Bank of Cleveland

There appears to be little support in the data for one of the most widespread explanations for low real rates across advanced economies, according to new research published by the Federal Reserve Bank of Cleveland.

Kurt Lunsford studies the long-running relationship between real interest rates and productivity growth between 1914 and 2016, and finds correlation between the variables is negative. Cutting out the Great Depression and two world wars yields a correlation close to zero.

“The

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