2023
DOI: 10.1002/ijfe.2819
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The natural real rate of interest and monetary policy: New evidence for the US

Abstract: We propose a new method to estimate the unobservable natural real rate of interest in the United States (US). We begin by describing the natural rate in the New Keynesian model and then theoretically linking its evolution to both demand and supply‐side shocks hitting the US economy. Our results indicate that the technology shock dominated the shift in the natural real rate of interest during the sample period 1947–2017. In addition, we also examine whether the Taylor rule should be augmented for changes in the… Show more

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References 37 publications
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