{
  "title": "It is Only Natural: Europe’s Low Interest Rates",
  "publication": "IMF Working Papers, July 3, 2020",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2020/07/03/it-is-only-natural-europes-low-interest-rates-49525",
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  "summary": "Estimates of the natural interest rate are often useful in the analysis of monetary and other macroeconomic policies. The topic gathered much attention following the great financial crisis and the Euro Area debt crisis due to the uncertainty regarding the timing of monetary policy normalization and",
  "sections": [
    {
      "heading": "Overview and scope",
      "content": "- Authors: Marco Arena, Gabriel Di Bella, Alfredo Cuevas, Borja Gracia, Vina Nguyen, Alex Pienkowski\n- Publication date: July 3, 2020\n- Sample and period: a sample of European countries (including several members of the Euro Area), 2000–2019\n- Pages: 59\n- Series: Working Paper No. 2020/116; Volume: 2020; Issue: 116\n- DOI: https://doi.org/10.5089/9781513549170.001\n- ISBN: 9781513549170\n- ISSN: 1018-5941"
    },
    {
      "heading": "Key findings on natural interest rates",
      "content": "- Estimates of country-specific natural interest rates and some of their drivers are provided for 2000–2019.\n- Natural interest rates declined during 2000–2019.\n- There was a rebound in the last few years of the sample period, but natural interest rates \"have not recovered to their pre-crisis levels.\""
    },
    {
      "heading": "Methods and technical approach",
      "content": "- The study produces country-specific estimates (European sample, including several Euro Area members).\n- Keywords and methodological indicators in the study: Bayesian estimation, market data, shadow rate, T-bill rate, risk premium, country risk."
    },
    {
      "heading": "Macroeconomic themes and policy-relevant topics addressed",
      "content": "- Central bank policy rate\n- Monetary policy and monetary policy stance\n- Output gap and production\n- Real interest rates and Neutral/Natural interest rate concepts\n- Debt sustainability and fiscal policy implications\n- Financial crises and the Global financial crisis of 2008-2009\n- Reserve currency considerations and market risk factors"
    },
    {
      "heading": "Implications and interpretation",
      "content": "- The decline in natural interest rates has implications for:\n  - Monetary conditions: lower natural rates affect the neutral policy rate benchmark and the timing and scope for monetary policy normalization.\n  - Debt sustainability: lower natural rates influence debt dynamics and fiscal policy space.\n- The persistence of natural rates below pre-crisis levels, despite a partial rebound, suggests ongoing constraints on normalizing policy rates to earlier historical norms."
    },
    {
      "heading": "Subject tags (as presented)",
      "content": "- Central bank policy rate, Financial crises, Financial services, Global financial crisis of 2008-2009, Output gap, Production, Real interest rates\n\nIMF Working Paper: \"It is Only Natural: Europe’s Low Interest Rates\", Working Paper No. 2020/116, July 3, 2020.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2020/07/03/it-is-only-natural-europes-low-interest-rates-49525"
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    "Authors: Marco Arena, Gabriel Di Bella, Alfredo Cuevas, Borja Gracia, Vina Nguyen, Alex Pienkowski",
    "Published: July 3, 2020",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513549170.001",
    "Authors: Marco Arena, Gabriel Di Bella, Alfredo Cuevas, Borja Gracia, Vina Nguyen, Alex Pienkowski",
    "Publication date: July 3, 2020",
    "Sample and period: a sample of European countries (including several members of the Euro Area), 2000–2019",
    "Pages: 59",
    "Series: Working Paper No. 2020/116; Volume: 2020; Issue: 116",
    "DOI: https://doi.org/10.5089/9781513549170.001",
    "ISBN: 9781513549170",
    "ISSN: 1018-5941",
    "Estimates of country-specific natural interest rates and some of their drivers are provided for 2000–2019.",
    "Natural interest rates declined during 2000–2019.",
    "There was a rebound in the last few years of the sample period, but natural interest rates \"have not recovered to their pre-crisis levels.\"",
    "The study produces country-specific estimates (European sample, including several Euro Area members).",
    "Keywords and methodological indicators in the study: Bayesian estimation, market data, shadow rate, T-bill rate, risk premium, country risk.",
    "Central bank policy rate",
    "Monetary policy and monetary policy stance",
    "Output gap and production",
    "Real interest rates and Neutral/Natural interest rate concepts",
    "Debt sustainability and fiscal policy implications",
    "Financial crises and the Global financial crisis of 2008-2009",
    "Reserve currency considerations and market risk factors",
    "The decline in natural interest rates has implications for:",
    "The persistence of natural rates below pre-crisis levels, despite a partial rebound, suggests ongoing constraints on normalizing policy rates to earlier historical norms.",
    "Central bank policy rate, Financial crises, Financial services, Global financial crisis of 2008-2009, Output gap, Production, Real interest rates",
    "**Working Paper**"
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