{
  "title": "The Mirage of Falling R-stars",
  "publication": "IMF Working Papers, July 26, 2024",
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  "summary": "Was the recent decline in real interest rates driven by a diminishing natural real interest rate, or have we observed a long sequence of shocks that have pushed market rates below the equilibrium level?",
  "sections": [
    {
      "heading": "Summary and main finding",
      "content": "- Research question: Was the recent decline in real interest rates driven by a diminishing natural real interest rate, or by a long sequence of shocks that have pushed market rates below the equilibrium level?\n- Main finding: On a sample of 12 open economies, once equilibrium real exchange rate appreciation/depreciation is accounted for, the natural real interest rate in the 2000s and 2010s is no longer found to be declining to near or below zero.\n- Key deviation from prior work: The explicit inclusion of equilibrium real exchange rate appreciation in the identification of the natural rate is the main deviation from the Laubach-Williams approach."
    },
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      "heading": "Methodology and model",
      "content": "- Model features:\n  - A full-blown semi-structural model with a monetary policy rule and expectations.\n  - Explicit identification of equilibrium real exchange rate appreciation/depreciation.\n- Estimation approach:\n  - Bayesian estimation is used to obtain parameter values for individual countries.\n- Sample:\n  - 12 open economies."
    },
    {
      "heading": "Subjects and keywords (as listed)",
      "content": "- Subject: Central bank policy rate, Exchange rate adjustments, Exchange rates, Financial services, Foreign exchange, Real exchange rates, Real interest rates\n- Keywords: ales Bulfr, Central bank policy rate, equilibrium real appreciation, Exchange rate adjustments, Exchange rates, Global, HLW estimate, HLW framework, open-economy extension, Penn effect, r-star, Real exchange rates, Real interest rates, Time-Invariant Estimates, zero lower bound\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/2024/07/26/the-mirage-of-falling-r-stars-552122"
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    "Authors: Aleš Bulíř, Jan Vlcek",
    "Published: July 26, 2024",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400282966.001",
    "Research question: Was the recent decline in real interest rates driven by a diminishing natural real interest rate, or by a long sequence of shocks that have pushed market rates below the equilibrium level?",
    "Main finding: On a sample of 12 open economies, once equilibrium real exchange rate appreciation/depreciation is accounted for, the natural real interest rate in the 2000s and 2010s is no longer found to be declining to near or below zero.",
    "Key deviation from prior work: The explicit inclusion of equilibrium real exchange rate appreciation in the identification of the natural rate is the main deviation from the Laubach-Williams approach.",
    "Model features:",
    "Estimation approach:",
    "Sample:",
    "Subject: Central bank policy rate, Exchange rate adjustments, Exchange rates, Financial services, Foreign exchange, Real exchange rates, Real interest rates",
    "Keywords: ales Bulfr, Central bank policy rate, equilibrium real appreciation, Exchange rate adjustments, Exchange rates, Global, HLW estimate, HLW framework, open-economy extension, Penn effect, r-star, Real exchange rates, Real interest rates, Time-Invariant Estimates, zero lower bound",
    "**Working Paper**"
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