Measuring the Equilibrium Real Interest Rate
14 Pages Posted: 11 Mar 2010
Date Written: March 10, 2010
Abstract
The equilibrium real interest rate represents the real rate of return required to keep the economy’s output equal to potential output. This article discusses how to measure the equilibrium real interest rate, using an empirical structural model of the economy.
Keywords: real interest rate, potential output, structural models, state-space representation, Model Construction and Estimation, Macroeconomics and Monetary Economics, Monetary Policy
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