Measuring the Equilibrium Real Interest Rate

14 Pages Posted: 11 Mar 2010

See all articles by Alejandro Justiniano

Alejandro Justiniano

Federal Reserve Bank of Chicago

Giorgio E. Primiceri

Northwestern University - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

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

Suggested Citation

Justiniano, Alejandro and Primiceri, Giorgio E., Measuring the Equilibrium Real Interest Rate (March 10, 2010). Economic Perspectives, Vol. XXXIV, No. 1, 2010, Available at SSRN: https://ssrn.com/abstract=1568139

Alejandro Justiniano (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

Giorgio E. Primiceri

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States

HOME PAGE: http://faculty.econ.northwestern.edu/faculty/primiceri

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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