Lower for Longer: Neutral Rates in the United States

Author:Andrea Pescatori - Jarkko Turunen

We use a semi-structural model to estimate neutral rates in the United States. Our Bayesian estimation incorporates prior information on the output gap and potential output (based on a production function approach) and accounts for unconventional monetary policies by using estimates of "shadow" policy rates. Our results show a significant trend decline in the neutral real rate over time.... (see full summary)

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