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The Post‑Pandemic Global R*

4mo ago

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libertystreeteconomics.newyorkfed.orgThe Post‑Pandemic Global R*newyorkfed.org
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In this post we provide a measure of “global” r* using data on short- and long-term yields and inflation for several countries with the approach developed in “Global Trends in Interest Rates” (Del Negro, Giannone, Giannoni, and Tambalotti) . After declining significantly from the 1990s to before the COVID-19 pandemic, global r* has risen but remains well below its pre-1990s level. These conclusions are based on an econometric model called “ trendy VAR ” that extracts common trends across a multitude of variables. Specifically, the common trend in real rates across all the countries in the sample is what we call global r*. The post is based on the discussion of an insightful paper by Lukasz Rachel on the drivers of r* presented at the Brookings Papers on Economic Activity Fall 2025 conference .

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