The demography of the eurozone has depressed the region’s interest rates and will continue to do so unless policymakers act, a working paper published by the European Central Bank argues.

In On secular stagnation and low interest rates: demography matters, Giuseppe Ferrero, Marco Gross and Stefano Neri attempt an “empirical, panel equation system-based assessment” of how European population trends have affected real and nominal interest rates.

The authors present two counterfactual scenarios