Interest Rate Trends in a Global Context: Expanding the Evidence Base for Forecasting

Published: 2019
Project ID: UM19-05


Real interest rates have been declining both in the U.S. and across the developed world. Some of the underlying global economic conditions that are thought to have caused this decline (e.g., world population growth and productivity slowdowns) are expected to persist. Other factors specific to the U.S. – retirement of baby boomers, growth in the U.S. government debt, the recent corporate tax cut and changes in international capital flows – may put upward pressure on U.S. rates. Will these domestic developments lead to rising real rates in the U.S.? The answer depends on the quantitative assessment of both global and domestic factors. We propose to analyze cross-country evidence and synthesize recent studies to measure the global component of the US interest rates and to assess the influence of global and domestic factors on interest rate forecasts.