From the Federal Reserve Bank of New York:
Staff Reports
May 2017 Number 812
JEL classification: C11, C32, C54, E43, E44
Why are interest rates so low in the Unites States? We find that they are low primarily because
the premium for safety and liquidity has increased since the late 1990s, and to a lesser extent
because economic growth has slowed. We reach this conclusion using two complementary
perspectives: a flexible time-series model of trends in Treasury and corporate yields, inflation,
and long-term survey expectations, and a medium-scale dynamic stochastic general equilibrium
(DSGE) model. We discuss the implications of this finding for the natural rate of interest.
80 pages / 5.4 mb
