A long view of real rates

Jagjit Singh Chadha, N Dimsdale

    Research output: Contribution to journalArticlepeer-review

    25 Citations (Scopus)

    Abstract

    In light of the large and sustained rise in real interest rates in the late 1970s and early 1980s, this paper reviews: (i) the theoretical discussion on the determination of nominal and real interest rates; (ii) the factors determining real interest rates; and (iii) problems of defining and measuring the real rate. We go on to examine the historical record of real interest rates in France, Germany, the UK, and the USA since 1875. We find that high real rates since 1980 seem to be a return to a long-run norm, and it is the period from the Second World War to 1979 that represents a more natural period in which to investigate an abrupt change of behaviour for real interest rates.
    Original languageEnglish
    Pages (from-to)17-45
    JournalOxford Review of Economic Policy
    Volume15
    Issue number2
    DOIs
    Publication statusPublished - 1999

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