Dear Colleague,
We cordially invite you to our wiiw seminar on
Monday, 4 February 2016, 5 pm
wiiw, Vienna 6, Rahlgasse 3, Library 2nd floor
The natural interest rate: concept, measurement and monetary policy implications
Dubravko Mihaljek
Head of Macroeconomic Analysis in the Monetary and Economic Department of the BIS
Abstract
Recent economic developments reinforce questions about what a new equilibrium in the global economy might look like. This is the case for both macroeconomic developments – how to interpret the continued weak global growth – and financial markets – how much stimulus near-zero interest rates provide, and how far policy rates in the United States and elsewhere have to rise during normalisation. Conceptually, the natural rate of interest could help answer these questions: it has traditionally been defined as the interest rate that would prevail when the economy is operating at potential and prices (inflation) are stable. Hence, knowing the level of the natural rate would allow central banks to assess how far current interest rates are from equilibrium. However, the natural rate is a multi-layered concept. Traditionally interpreted as a domestic macroeconomic equilibrium, in an open economy the natural rate can also be seen as representing a global macroeconomic equilibrium. In addition, the natural rate is unobservable and hence depends fundamentally on views about how the economy works. Various empirical approaches indicate that the natural rate has fallen in recent decades, although its current level may not be unprecedented.
(Papers and Powerpoint presentations, as far as available, are posted on our homepage http://wiiw.ac.at/events.html after the respective seminars.)
Best regards
Univ.Prof.Dr. Michael Landesmann Dr. Sándor Richter
Scientific Director wiiw Organizer
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Michaela Bönisch
Wiener Institut für Internationale Wirtschaftsvergleiche (wiiw)
The Vienna Institute for International Economic Studies
Rahlgasse 3, A-1060 Wien
T: +43 1 533 66 10 - 40
F: +43 1 533 66 10 - 50
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