Arbeitspapier

Finding the equilibrium real interest rate in a fog of policy deviations

Recently there has been an explosion of research on whether the equilibrium real interest rate has declined, an issue with significant implications for monetary policy. A common finding is that the rate has declined. In this paper we provide evidence that contradicts this finding. We show that the perceived decline may well be due to shifts in regulatory policy and monetary policy that have been omitted from the research. In developing the monetary policy implications, it is promising that much of the research approaches the policy problem through the framework of monetary policy rules, as uncertainty in the equilibrium real rate is not a reason to abandon rules in favor of discretion. But the results are still inconclusive and too uncertain to incorporate into policy rules in the ways that have been suggested.

Language
Englisch

Bibliographic citation
Series: IMFS Working Paper Series ; No. 103

Classification
Wirtschaft

Event
Geistige Schöpfung
(who)
Taylor, John B.
Wieland, Volker
Event
Veröffentlichung
(who)
Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS)
(where)
Frankfurt a. M.
(when)
2016

Handle
URN
urn:nbn:de:hebis:30:3-402045
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Taylor, John B.
  • Wieland, Volker
  • Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS)

Time of origin

  • 2016

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