16 min listen
Low interest rates: a transatlantic phenomenon
Low interest rates: a transatlantic phenomenon
ratings:
Length:
39 minutes
Released:
Mar 10, 2021
Format:
Podcast episode
Description
Maria Demertzis and Nicola Vegi join Giuseppe Porcaro to talk about their recent research on low interest rates, declining productivity growth and how to tackle this.
In both Europe and the United States, interest rates have been declining for more than fifteen years. For much of this period, real interest rates have been negative and they are expected to remain negative for at least another decade. The literature associates this decline in interest rates with a similarly protracted decline in productivity. But the decline in productivity appears paradoxical given major technological advances.
The structural factors behind the downward pressure on interest rates imply that macroeconomic policy will have a reduced role in managing aggregate demand. Monetary policy in the euro area will be more about preventing financial fragmentation and less about stimulating demand. Equally, fiscal policy will have more of a supporting rather than stimulating role.
Tackling the structural decline in market dynamism and therefore in real rates will require structural policies to reduce market power globally and ensure the creation of capital markets in the EU.
Released:
Mar 10, 2021
Format:
Podcast episode
Titles in the series (100)
Labour mobility in Europe: This episode of The Sound of Economics focuses on labour mobility in Europe. Anti-immigration sentiment is on the rise due to the perception that immigrants are taking away jobs and benefits. But what is the real impact of migration on European labour ... by The Sound of Economics