Rents, Technical Change, and Risk Premia
13 Pages Posted: 24 Mar 2017
Date Written: March 21, 2017
Abstract
The secular decline in safe interest rates since the early 1980s has been the subject of considerable attention. In this short paper, we argue that it is important to consider the evolution of safe real rates in conjunction with three other first-order macroeconomic stylized facts: the relative constancy of the real return to productive capital, the decline in the labor share, and the decline and subsequent stabilization of the earnings yield. Through the lens of a simple accounting framework, these four facts offer insights into the economic forces that might be at work.
Suggested Citation: Suggested Citation
Caballero, Ricardo J. and Farhi, Emmanuel and Gourinchas, Pierre-Olivier, Rents, Technical Change, and Risk Premia (March 21, 2017). MIT Department of Economics Working Paper No. 17-05, Available at SSRN: https://ssrn.com/abstract=2939860 or http://dx.doi.org/10.2139/ssrn.2939860
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