BoE: consumption volatility explains global decline in real interest rate
A Bank of England paper published Thursday finds that greater output volatility, through rising foreign exchange rate premia, is the cause of lower real interest rates worldwide.
Charlotta Groth and Fabrizio Zampolli, the paper's authors, construct a measure of the short-term world interest rate using real interest rate data between 1985 and 2008 from 18 Organisation for Economic Cooperation and Development (OECD) countries to explain why real interest rates in many countries have deviated from
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