Growing market power, rising unmeasured intangibles and higher risk premia are key factors in the long-term decline of risk-free rates, research published by the Brookings Institution finds.

Emmanuel Farhi and François Gourio challenge widespread hypotheses of falling long-run rates, including the ‘savings glut’ theory and arguments based on diminishing returns to technology.

The authors stress the importance of thinking about three puzzles simultaneously: the growing gap between returns on