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Examining the Differences in r* Estimates

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Abstract

With inflation declining over the course of the year and the Federal Open Market Committee (FOMC) seemingly in the process of normalizing policy, a key question is: What is the natural real rate of interest (denoted r*)? In this article, we will shed light on what r* means, what models are used to estimate it and what the benefits and drawbacks are for these models.

Suggested Citation

  • Paul Ho & Thomas A. Lubik, 2024. "Examining the Differences in r* Estimates," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 24(36), November.
    • Handle: RePEc:fip:fedreb:99145
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    File URL: https://www.richmondfed.org/publications/research/economic_brief/2024/eb_24-36
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