Icelandic paper finds evidence of rising natural rate
Rate is highly uncertain but appears to be trending upwards
Though notoriously hard to estimate, a range of models suggest Iceland's natural interest rate has risen in recent years, according to a working paper published on December 7 by the Central Bank of Iceland.
Ásgeir Daníelsson, Ólafur Helgason and Stefán Thórarinsson attempt various methods of estimating the natural rate, including the "celebrated" approach of Thomas Laubach and John Williams. Different models give different figures, from about 3.5% in some models to as much as 5% under Laubach
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