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Estimates of the natural interest rate for the euro area: an update

Author

Listed:
  • Brand, Claus
  • Lisack, Noëmie
  • Mazelis, Falk

Abstract

The natural rate of interest is defined as the real rate of interest that is neither expansionary nor contractionary. r* is unobservable and its estimation is fraught with a host of measurement and model-specification challenges. A wide range of estimates obtained from a suite of models and approaches suggests that cyclical measures of euro area r* have been edging higher recently. Yet slow-moving estimates anchored to long-run economic trends are unlikely to have risen measurably. JEL Classification: E43, E52

Suggested Citation

  • Brand, Claus & Lisack, Noëmie & Mazelis, Falk, 2024. "Estimates of the natural interest rate for the euro area: an update," Economic Bulletin Boxes, European Central Bank, vol. 1.
    • Handle: RePEc:ecb:ecbbox:2024:0001:7
    Note: 92649
    as

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    More about this item

    Keywords

    natural real rate of interest; neutral real rate of interest;

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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