Perspectives on High World Real Interest Rates

52 Pages Posted: 25 Jun 2004

See all articles by Olivier J. Blanchard

Olivier J. Blanchard

National Bureau of Economic Research (NBER); Peter G. Peterson Institute for International Economics

Lawrence H. Summers

Harvard University; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Date Written: June 1986

Abstract

Real interest rates in the United States have reached extremely high levels in the last several years. This surge in real rates at all maturities has not lacked explanations. Large current and prospective deficits, tight money, better profit prospects, financial deregulation, and increased uncertainty are among the factors than have been blamed for high real rates. If one looks only at the performance of the U.S. bond market, it is difficult to discriminate among possible explanations for the behavior of real interest rates. This paper examines the worldwide behavior of interest rates and the performance of other asset markets besides the U.S. bond market in order to better explain high real rates.

Suggested Citation

Blanchard, Olivier J. and Summers, Lawrence H., Perspectives on High World Real Interest Rates (June 1986). NBER Working Paper No. R0720. Available at SSRN: https://ssrn.com/abstract=227531

Olivier J. Blanchard (Contact Author)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
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Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
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Lawrence H. Summers

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States
617-495-1502 (Phone)
617-495-8550 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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