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What is the neutral real interest rate, and how can we use it?

Author

Listed:
  • Joanne Archibald
  • Leni Hunter

    (Reserve Bank of New Zealand)

Abstract

This article sets out the Reserve Bank's conception of the "neutral real interest rate", and identifies factors that influence its level. These factors provide a starting point for thinking about what might cause the neutral real interest rate to change over time, or differ across countries. We consider the uses and limitations of neutral real interest rates in answering some of the questions that are relevant to monetary policy, and present a range of estimates of the neutral real interest rate for New Zealand.

Suggested Citation

  • Joanne Archibald & Leni Hunter, 2001. "What is the neutral real interest rate, and how can we use it?," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 64, September.
    • Handle: RePEc:nzb:nzbbul:september2001:2
    as

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    File URL: http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/2001/2001sep64-3ArchibaldHunter.pdf
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    References listed on IDEAS

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