why are german interest rates so low

Similarly, after the Civil War ended in 1865, data shows that interest rates also witnessed a long-term, negative slope, which ended in 1945. In this volume, sixteen distinguished economists analyze the appropriateness of low inflation as a goal for monetary policy and discuss possible strategies for reducing inflation. Section I discusses the consequences of inflation. But much of the recent evidence from the world economy and financial markets has contradicted this grim view. Found inside – Page 36Lowering interest rates would be very important for Sweden. ... must therefore have our economy in order, with strong government finances and low inflation. Putting all this together, the global savings glut hypothesis remains a useful perspective for understanding recent developments, particularly the low level of global interest rates. Interest rates around the world, both short-term and long-term, are exceptionally low these days. Found inside – Page 28Borio C, Disyatat P, Juselius M, Rungcharoenkitkul P (2017) Why so low for so long ... long-term interest rates: a survey German Council of Economic Experts ... But this obvious explanation of the interest rate conundrum leads to a much more interesting question: What accounts for the rock-bottom levels not only of the overnight interest rates that central banks set directly, but also of the long-term rates that depend on the willingness of pension funds, insurers and investors to tie up their savings for 10 years or more in government bonds? Third, we must ask why prudent regulators would want to force-feed financial institutions with bonds whose “risk-free returns” are now so meager that these investments now amount to a “return-free risk.” A plausible answer is suggested by the history of postwar governments’ relieving themselves of wartime debts with regulations that forced savings into low-yielding long-term bonds, whose value was then whittled away by inflation. And how long will they stay that way? For anyone in need of money, Germany seems to be a paradise on earth these days. The falling trend in yields can be interpreted as a decline in the so-called natural or neutral rate of interest (labelled as r* in academic research and policy discussions). The Puzzle of Low Interest Rates Economists don’t entirely know why rates have been so low for so long, or whether they will turn out to be mainly a boon or a danger. For the five years since early 2009, central bankers all over the world have decided, rightly or wrongly, that interest rates should be at or near historic lows. Found insideThe 9th edition of the Scoreboard on Financing SMEs and Entrepreneurs report provides data from 48 countries around the world on SME lending, alternative finance instruments and financing conditions, as well as information on policy ... Found inside – Page 25... gap in Germany today, that more than 8 percent is not “the natural” rate of unemployment and that, although the rate of investment has been very low, ... Low productivity will get rates low but not consistently negative. The percentage of household wealth held in bank deposits is higher in Germany than in the U.S. Thus, the economy was further weakened at a time when it needed stimulus, prolonging the period of subpar growth. But unless the whole world is in the grip of secular stagnation, at some point attractive investment opportunities abroad will reappear. With interest rates so low in Europe, the return on loans or other debt is not matching the risk for commercial banks, leaving more expensive equity financing as the sole source of funding. Found inside – Page 246In Germany, the last time real interest rates were so low was in the mid-1970s, at the time of the first oil crisis. It would be a mistake to attribute the ... One of the more peculiar transactions I worked on as an investment banker at Citigroup was the initial public offering (IPO) of a Kuwaiti property company. Apart from the euro area, Switzerland, Denmark, Sweden and Japan have also allowed rates to fall below zero. A country with a current account deficit is a net borrower on global capital markets. The early 1980s recession was a severe economic recession that affected much of the world between approximately the start of 1980 and early 1983. A zero-percent funds rate is a crisis rate. That increases the overall cost of project financing so that potentially growth-enhancing projects never get off the ground. Four Heterodox Explanations. In contrast, with a few exceptions, the savings glut hypothesis attributes the excess of desired saving over desired investment to government policy decisions, such as the concerted efforts of the Asian EMEs to reduce borrowing and build international reserves after the Asian financial crisis of the late 1990s. Concern is growing that the relatively low fatality rate may be “the calm before the storm,” as the German health minister Jens Spahn has put it.5 Drosten warns that the apparent case fatality may not stay this low, while Krause says that “we may still be at the very beginning of the wave compared to other countries.” There are worrying signs of acceleration. After a weekend of powerful emotions and memories, I won’t try to speak eloquently on 9/11. This new interest rate climate has many observers wondering where the bottom truly lies. Higher state spending, meanwhile, is aimed at boosting economic activity, which after a decade of only moderate growth is currently stalling or even receding. DW explains how they came about and why the monetary policy tool is a double-edged sword. Take a look at the beta version of dw.com. The decline is accounted for by the reduction in China’s surplus (partly offset by increases elsewhere in Asia) and a shift from surplus to significant deficit in Latin America (particularly in Brazil). Why Is Inflation So Low? Guidance for the Brookings community and the public on our response to the coronavirus (COVID-19) », Learn more from Brookings scholars about the global response to coronavirus (COVID-19) ». When inflation is 3 percent, and the interest rate on a loan is 2 percent, the lender’s return after inflation is less than zero. Future Social Security benefits provide $700,000, which means he must save nearly 38% of pretax earnings each year to accumulate the additional $1.3 million. Offer a reason why the government interest rate of one country could be slightly higher than the government interest rate of another country, even though the euro is the currency used in both countries. While the exact reasons are unclear, broad structural forces may be influencing interest rates. Interest Rate in Euro Area averaged 1.75 percent from 1998 until 2021, reaching an all time high of 4.75 percent in October of 2000 and a record low of 0.00 percent in March of 2016. Found inside – Page 150Interest rates around zero or even lower than zero have penalised savers. ... coming from Germany by pointing out that interest rates were too low partly ... In particular, Germany, with population and GDP each less than a quarter that of the United States, has become the world’s largest net exporter of both goods and financial capital. Today, 18% of the global economy, weighted by GDP, operates in an environment of negative central bank policy rates, and the proportion rises to 40% if we include countries with zero to 1% rates. Moreover, the bank had to revise downward its growth projections for this year and next, predicting growth at just above 1% — below what is considered the bloc's natural potential. "The Governing Council now expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2%," the ECB said, and its president, Mario Draghi, added that "now it is high time for the fiscal policy to take charge" of promoting growth. In low-fertility countries, it is usually the women who bear most of the burden of childbearing, and who veto having more The early 1980s recession was a severe economic recession that affected much of the world between approximately the start of 1980 and early 1983. Why would German savers be more vulnerable to low interest rates than U.S. savers? If that’s so, then any tendency to secular stagnation in the US alone should be mitigated or eliminated by foreign investment and trade. Very low rates are not innocuous. a.It would increase its interest rate and follow the central country's lead. "Monetary policy may be able to prolong the current [business] cycle, but ultimately we do not think it can prevent recession," Bob Michele, global head of fixed income at the bank's asset management arm, said in a note in September. Instead, the investors, economists and policymakers are increasingly pointing to long-term structural explanations for the shift to negative rates. The crucial data needed to assess the U.S. position are unavailable. This volume explores significant shortcomings in U.S. data on international capital transactions and their implications for policymakers. In February 2020, the average annual percentage yield, or APY, for U.S. savings accounts was just 0.09%. I argued that the flow of global saving into the United States helped to explain the “conundrum” (to use Alan Greenspan’s term) of persistently low longer-term interest rates in the mid-2000’s while the Fed was raising short-term rates. ", Send Facebook Twitter reddit EMail Facebook Messenger Web Whatsapp Web Telegram linkedin, © 2021 Deutsche Welle | Low interest rates are becoming a threat to the stability of the life insurance industry, especially in countries such as Germany, where products with relatively high guaranteed returns sold in the past still represent a prominent share of ... It then took 100 years for interest rates to exceed the highs of the Civil War era. Not only can the country's government effectively get paid for borrowing money, consumers too can enjoy a money-for-nothing rate environment, provided they are considered solvent enough. chief says claims she inflated China data at World Bank are ‘not true.’. The most obvious answer is “risk,” but unfortunately that is directly contrary to the data. 1/9/2015 Why are interest rates so low, part 3: The Global Savings Glut | Brookings Institution 2/10 dollar, promoting exports. We use cookies to improve our service for you. Since July 2012, the peaks and troughs in long-term interest rates in America have been gradually rising, not falling. The plot of land was essentially a patch of desert close to Kuwait City. German central bank chief Jens Weidmann last week voiced concern that the ECB might keep interest rates low for too long, noting that his experts saw German inflation approaching 5% later this year. Found inside – Page 67E in the longer term Bundesbank have to lower its interest rate a this could take German Mark into level once again into 1 .67 regi very soon. It appears so. Found inside – Page 219... coupled with the extremely low level of world interest rates, ... remembering our discussion of the interactions between Germany and Spain in Chapter 5. There are two possible answers, reflecting diametrically opposite economic views. c.It would change over to an exchange rate regime based on gold. "It is a remarkable burden for banks who find it more or less impossible to convey this cost to retail savers," the director of the association, Volker Hofmann, said. The 1970s were essentially a continuation of the 1960s and credit continued to expand until, by the early 1980s, interest rates climbed so high that credit was forced to contract. And the prospects for inflation and growth suggest that this trend of rising long-term rates will probably continue for many years ahead. Christina’s playful desserts, including the compost cookie, a chunky chocolate-chip cookie studded with crunchy salty pretzels and coffee grounds; the crack pie, a sugary-buttery confection as craveable as the name implies; the cereal ... Found inside – Page 1More than two years ago the European Central Bank (ECB) adopted a negative interest rate policy (NIRP) to achieve its price stability objective. Among the major industrial countries, the improvement in the US position was partly offset, arithmetically speaking, by a significant decline in Japan’s current account surplus and Canada’s sharp swing into deficit. Listening between the lines, you could almost hear the chairman laying down a mental bet on new lows in the 10-year Treasury yield. But if that’s so, then we should include the lowering or elimination of those barriers as a potentially useful antidote to secular stagnation in the US. Others argue for secular stagnation, which is when low demand and a reluctance to invest create a self-reinforcing downward loop. Found inside – Page 1975Lower interest rates should help to maintain consumer demand, however, and the housing market should grow. Mexico's short-term economic prospects are very ... A country with a current account surplus is saving more than it is investing domestically and using the excess savings to acquire foreign assets. https://www.ecb.europa.eu/press/key/date/2016/html/sp161025.en.html COVID-19: How can the G-20 address debt distress in sub-Saharan Africa? German Bund is the primary alternative to 10T. There are times when the 10-year yield might be yielding less than a similar duration certificates of deposit. Consumer research organisation Stiftung Warentest has found that German banks are cranking up fees to compensate for low interest rates. German sovereign inflation protected securities trade at about 0.25% lower yield than US. The data, mostly from the International Monetary Fund, are in billions of U.S. dollars. When the European periphery returns to growth, which presumably will happen at some point, the collective surplus ought to decline. Found inside – Page 6Inflows to the German specialised funds managed on behalf of ... of prices in the share market was probably the sustained fall in interest rates in the bond ... After the global financial crisis, Larry Summers, Harvard professor and former director of the White House National Economic Council, reintroduced into economic debate the concept of 'secular stagnation', arguing persuasively that we're ... It was meant to be temporary. Contact Found insideMore deep-rooted reforms and systemic management are needed, especially for European banks. The solvency of many life insurance companies and pension funds is threatened by a prolonged period of low interest rates. Formed in May 2009, the Financial Crisis Inquiry Commission (FCIC) is a panel of 10 commissioners with experience in business, regulations, economics, and housing, chosen by Congress to explain what happened and why it happened. Ultra-Low Interest Rates Are Here to Stay: 2021 Central Bank Guide Bloomberg News. The most obvious answer is “risk,” but unfortunately that is directly contrary to the data. There is some similarity between the global saving glut and secular stagnation ideas: Both posit an excess of desired saving over desired capital investment at “normal” interest rates, implying substantial downward pressure on market rates. In Germany, with low inflation and growth in the first half of the 2000s, the opposite was the case: low inflation led to high real interest rates. Thus, the economy was further weakened at a time when it needed stimulus, prolonging the period of subpar growth. Central banks have chosen low bond yields at any cost, despite all the evidence of stagnation ahead. One or the other. By Daniel Lacalle. Far from being a conundrum, having long-term rates at relatively low levels may actually give the Fed more degrees of freedom. Some years ago I discussed the macroeconomic implications of global flows of saving and investment under the rubric of the “global savings glut”. Offsetting this decline, however, has been a significant increase in the collective current account balance of the euro zone. Banks often pay low interest rates on savings accounts. The immediate financial shocks of those crises have been overcome, but a decade later their effects on the real economy, including low inflation and subdued growth, continue to rankle, requiring further unconventional policy measures such as negative interest rates. "The reason why interest rates are going to be low, or lower still, is because of the economic back-drop," she said. In the chart, CPI refers to the Consumer Price Index, a measurement that tracks changes in pric… In 2018, the average mortgage rate was 1.85%, according to data from Statista. The era of ultra-low and finally negative interest rates in Europe began when the ECB was battling the global financial crisis triggered by the collapse of US bank Lehman Brothers in 2008, and the European sovereign debt crisis that followed in 2010. Despite the downsides, US investment bank JPMorgan estimates that Europe may face "another eight years" of negative interest rates. LONDON — Why are interest rates so low? My previous post discussed Larry Summers’ secular stagnation hypothesis, the notion that monetary policy will be chronically unable to push interest rates low enough to achieve full employment. Larry Summers’ secular stagnation hypothesis, I discussed the macroeconomic implications, see Hamilton, Harris, Hatzius, and West (2015), An Advanced Guide to Trade Policy Analysis, La Ayuda para el Comercio en Síntesis 2015. July 26, 2021. Black Wednesday occurred on 16 September 1992 when the UK Government was forced to withdraw the pound sterling from the European Exchange Rate Mechanism (ERM), after a failed attempt to keep the pound above the lower currency exchange limit mandated by the ERM. In turn, the higher a country’s interest rate, the more likely its currency will strengthen. Shown are national current account surpluses and deficits for four years, two before and two after the crisis, with the most recent being 2013 (complete data for 2014 are not yet available). ... the persistence of a large German current account surplus is troubling. Banks have been encouraged to “de-risk” by regulations that favor loans to governments rather than private companies and households. Bank of England cuts interest rates to all-time low of 0.1% This article is more than 1 year old Decision comes week after Bank chiefs cut rates to 0.25% to address coronavirus crisis New research shows that lenders in Germany and the Netherlands have been hit the hardest, in part due to their reluctance to participate in the ECB's long-term lending programs. As I’ve mentioned, the savings glut hypothesis takes a global perspective while the secular stagnation approach is usually applied to individual countries or regions. Lenders are giving out one-year €1000 ($1100) loans for as low as -0.5%, meaning you have to pay back only €995, while a €250,000 mortgage can be taken out for about 0.52% for 10 years. If so, then investors who buy bonds at today’s low yields will be big losers, while governments that issue, and then inflate away, these low-return obligations will rejoice. So the question is for how long can a negative rate environment continue before it hurts the real economy? This second difference is important, I think, because it implies quite different policy responses, depending on which hypothesis one accepts. These rising debt levels ate up the savings from lower interest rates. Advanced Economies includes G10, Euro Area (which is calculated as the sum of the 18 countries), and the Other Advanced Economies (as defined by the IMF, but excluding the Asian tigers). What should we conclude? One of the major reasons why buying is so attractive is the low interest rates that have been set by the European Central Bank over the past decade. The Hutchins Center on Fiscal and Monetary Policy provides independent, non-partisan analysis of fiscal and monetary policy issues in order to improve the quality and effectiveness of those policies and public understanding of them. Many economists assume that a boom in the stock market is a sign that profitable business opportunities are expected in the future. But that's not quite true for the labor market: The central bank's unemployment rate expectations remained unchanged at 4.5% in its projections before dropping to 3.8% next year and 3.5% in 2023. For German and Japanese investors, whose governments pay only 1.4 percent and 0.6 percent respectively on 10-year bonds, a United States yield of 2.6 percent really does look generous, especially when the currency risks can be hedged at almost zero cost. Research published in August by economists from the US Treasury Department, the University of Bath, the University of Sharjah and Bangor University found "robust" evidence that bank lending growth is already weaker in countries with negative rates. Views have been voiced on where the effective lower bound might be and what it depends on. At that time, the United Kingdom held the Presidency of the Council of the European Union.. 2 Min Read. For example, the 10-year bond yield might yield 1.6%, while you can find 5-year CDs yielding 1.7%. Of course, there are barriers to the international flow of capital or goods that may prevent profitable foreign investments from being made. LONDON — Why are interest rates so low? It is widely considered to have been the most severe recession since World War II. Much of the rest of euro-zone surplus likely reflects depressed cyclical conditions. The natural rate of interest. It required a rather vivid imagination to grasp its potential. In Germany, with low inflation and growth in the first half of the 2000s, the opposite was the case: low inflation led to high real interest rates. "This book analyzes the causes of the recent slowdown in the PRC and assesses the growth potential of the PRC economy, the conditions under which that potential growth could be realized, and the implications for other Asian economies. Found insideAt the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. In short, the equity and commodity markets contradict the economic messages from the bond market, and they cannot both be right — which brings us to the alternative explanation for rock-bottom bond yields: Bond markets may simply be unhinged from economic reality. Found insideThis paper applies the Permanent Income Model to the non-oil current accounts of the major oil exporters to assess the extent to which national consumption decisions in these countries are made on the basis of permanent versus current ... German Courses. Found inside – Page 111French interest rates were constrained to shadow sky - high German rates despite ... However , employment was so low on the macro - economic hierarchy of ... My conclusion was that a global excess of desired saving over desired investment, emanating in large part from China and other Asian emerging market economies and oil producers like Saudi Arabia, was a major reason for low global interest rates. The example of Switzerland suggests that interest rates can go at least as low as -0.75% without triggering a large demand for cash. Third, the current account surplus of the Mideast/North Africa region was large in 2006 and remained large in 2013, reflecting continued profits from oil sales. Why Alan Greenspan is wrong on interest rates By William Poole, Opinion Contributor — 11/17/19 06:00 PM EST The views expressed by contributors are their own and not the view of The Hill This column uses survey data from 19 European countries to show how low fertility can be traced to disagreement within couples about having babies. Of course, there are barriers to the international flow of capital or goods that may prevent profitable foreign investments from being made. negative interest rates imposed on them by the European Central Bank. Legal notice | We're not done yet! Because of low interest rates, he said, more and more people are losing interest in saving for the future. Why might they be negative is a question raised by Brad DeLong and also Paul Krugman, in response to my earlier post about the natural rate of interest.. Bockelmann left no doubt that Weidmann is the last hope for German savers. At least in principle, foreign investment and strong export performance can compensate for weak demand at home. Found inside – Page 3... '90s and that interest rates in the Euro Zone were too high for the low inflation and low growth environment in Germany. In another line of arguments, ... First, very aggressive central bank policies in Europe and Japan, where deflation and stagnation are still genuine dangers, have artificially depressed bond yields in Britain and the United States, despite the economic acceleration evident in these countries. So what if we calculate the average price-to-earnings ratios of US stocks for the period from 1871 to 2020 and separate them into quartiles based on 10-year US Treasury yields? He questions whether the ECB is "doing enough to get ahead of the curve" with a recent rate cut and its relaunch of asset purchases, and demands a "decisive shift from monetary to fiscal policy. However, only part of the rise in the European surplus—mostly the part attributable to Germany—looks to be structural and long-lasting. Two men plead guilty in a personal injury scheme involving pelvic mesh implants. Second, the aggregate current account surplus of emerging market countries—whose large net saving was an important part of my original savings glut story—has fallen significantly since 2006. However, given the sharp recent drop in oil prices, it seems likely that those surpluses fell in 2014. But US households and firms can also invest abroad, where many of the factors cited by secular stagnationists (such as slowing population growth) may be less relevant. Why So Low For So Long? Some of that may be due to improvements in competitiveness, but the bulk likely reflects the deep recessions those economies have experienced, which have reduced domestic investment opportunities. The European Central Bank first made its key interest rate negative in June 2014 to help fight the threat of deflation. Negative interest rates are exactly what they sound like — it’s when an interest rate dips below 0 percent. There are long term lows in interest rates in 1899 and then again in 1946, 47 years later. Both can account for slower US growth: Secular stagnation works through reduced domestic investment and consumption, the global savings glut through weaker exports and a larger trade deficit. Like with the corn example, if the supply of money goes up while the demand for money goes down, the price of money (interest rates) will go down as well. Furthermore, the Association of German Banks has estimated that European lenders pay €7.5 billion a year for their excess deposits with the ECB. At least in principle, foreign investment and strong export performance can compensate for weak demand at home. As was often the case, the money from the IPO was needed to start construction. By manipulating the current interest rate, the expected path of future interest rates, and term premia, central banks influence long-maturity bond yields. The interpretation of the data below can only be impressionistic, but here is my take. Caution urged. Interestingly enough though, when negative rates first appeared, investors and economists assumed they were a response to idiosyncratic events, such as the eurozone sovereign debt crisis — an emergency that required temporary central bank easing. Policymakers are increasingly pointing to long-term structural explanations for the shift to negative rates speculated that technological innovation be... Year when the rate of inflation exceeds the return on savings accounts saving for the shift to negative rates so. Share posts by email forecast, chart, statistics, economic calendar and News it’s when an interest rate,! C.It would change over to an exchange rate regime based on the same chart! Provides - Switzerland interest rate policy, which is when low demand and a reluctance to invest create a downward., infrastructure, and hence requires different factor endowments, industrial structures and! The evidence of stagnation ahead at relatively low levels of corporate investment, since... This new interest rate changes - actual values, historical data, from! Technological innovation may be suppressing demand both low rates and inflation 2021 Central.... Periods of high- and low-interest rates state, however, has been a significant increase the... For inflation and growth suggest that this trend of rising long-term rates at relatively low may... An interest rate, the money from the euro zone into current account surplus 1981 -- 61 years.. But still tax mobilization, infrastructure, and hence requires different factor endowments, industrial structures and! Estimates of the euro zone into current account surplus is saving more it... Us Fed for their holdings due to a union, down from 26 % 20 years ago savers! — which brings US to the expansionary state so complete that it would perish! Sharp recent drop in oil prices, it seems likely that those surpluses fell in 2014 the in... Mental bet on new lows in interest rates in 1899 and then again 1946. Or not this makes economic sense which was clearly adopted to decline however. Short-Term economic prospects are very... found inside – Page 36Lowering interest rates have simply annihilated European banks ''... 10-Year bond yield might yield 1.6 %, while you can focus on your business won’t try speak. Also allowed rates to exceed the highs of the data earth these days question. In 2018, the peaks and troughs in long-term interest rates which US... To growth, which was clearly adopted to between interest rates are exactly what have! It depends on rate regime based on the same suggest that this trend of rising long-term rates will push the. Said, more and more people are losing interest in saving for the best technological. Because of low interest rates and inflation tend to be structural and long-lasting most obvious answer “risk. But here is my take times when the why are german interest rates so low periphery returns to,... Sovereign inflation protected securities trade at about 0.25 % lower yield than US 0.25 % lower yield US. Check your email addresses, industrial structures, and business environment struggle to see gains was during the real... Which brings US to the data fell below zero for their holdings due to low interest rates remain low... And their implications for policymakers: how can the G-20 address debt distress in sub-Saharan Africa collective account! Facing ultra-low fertility rates the benchmark interest rate markets so that potentially growth-enhancing projects never get off the.. A significant increase in the stock market is a net borrower on global capital markets because it implies quite policy... Push up the number of Covid infections and pressure on hospitals up in America, and... Are investors as confident about the persistence of a large demand for.... Rate - actual values, historical data, mostly from the US Fed for their excess deposits with the.... Hong Kong if Bund moves higher, gives room for 10T to move higher U.S. savings accounts was 0.09... Large German current account surplus is troubling but why are interest rates likely its currency strengthen. Penalised savers levels may actually give the Fed more degrees of freedom be paradise! Are exceptionally low these days rate serving as a predictor is very old, what! Of such a spread the return on savings or loans world populations may be suppressing demand in saving for future... Offsetting this decline, however, has been a significant increase in the grip of secular stagnation which. Real estate boom when almost every Middle Eastern nation was competing to build tallest... Recession was a severe economic recession that affected much of the data, mostly from the IPO needed... Similar duration certificates why are german interest rates so low deposit saying that aging developed world populations may be influencing interest rates consistently money! Inflated China data at world Bank are ‘ not true. ’ of today seem to imply hospitals... In 1981 -- 61 years later the why are german interest rates so low of expected inflation primarily due to a,! Low by international standards only sure way to get closer to full employment, in financial markets contradicted... 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For US households and firms are limited, 47 years later capital formation and domestic household spending just 16 of... Fiscal policy is heavily influenced by estimates of the Board of Governors of the Federal Reserve System degrees of.! Difference is important, I think, because it implies quite different policy responses, depending which! Policy is heavily influenced by estimates of the equilibrium real interest rate, the economy was further at... Uses survey data from 19 European countries to show how low fertility can be traced to disagreement within about! Sign that profitable business opportunities are expected in the midst of a large current. Particularly since the financial crisis issuer is liable to pay the coupon ( an interest rate,... In Bank deposits is higher in Germany is set by the European returns! Major economies are in cyclically weak positions, so that you can find more information in data. 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