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An Illustrative Calculation of r†: a presentation at Federal Reserve Bank of Atlanta 22nd Annual Financial Markets Conference, Amelia Island, Fla., May 8, 2017

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Abstract

Speaking at an Atlanta Fed conference on Amelia Island, Fla., St. Louis Fed President James Bullard discussed the downward trend in the natural real rate of interest, r?, in a regime-switching context. He looked at three factors that can influence the natural rate?the labor productivity growth rate, the labor force growth rate and an investor desire for safe assets. He noted that the U.S. is currently in a regime (or state) of low productivity growth and a regime of a high desire for safe assets, and those do not appear to be shifting. He also discussed the implications of the low natural rate for the Fed?s policy rate and concluded that the natural rate of interest, and hence the appropriate policy rate, is low and unlikely to change very much over the forecast horizon.

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  • James B. Bullard, 2017. "An Illustrative Calculation of r†: a presentation at Federal Reserve Bank of Atlanta 22nd Annual Financial Markets Conference, Amelia Island, Fla., May 8, 2017," Speech 284, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlps:284
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    1. Thomas Laubach & John C. Williams, 2003. "Measuring the Natural Rate of Interest," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1063-1070, November.
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    Cited by:

    1. William T. Gavin, 2018. "Monetary Policy Regimes and the Real Interest Rate," Review, Federal Reserve Bank of St. Louis, vol. 100(2), pages 151-169.

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