Investments and Long-term Real Interest Rate in Poland : Study of Investment Structure, Current Account and their Correlation with Long-term Real Interest Rates

2015 ◽  
Vol 1 (15) (2) ◽  
pp. 130-148
Author(s):  
Jakub Krawczyk ◽  
Szymon Filipczak
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Current Account ◽  
Real Interest Rate ◽  
Real Interest Rates ◽  
Investment Structure

scholarly journals Concluding Remarks on Economic Policy

2021 ◽  
pp. 309-320
Author(s):  
Carl Christian von Weizsäcker ◽  
Hagen M. Krämer
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Current Account ◽  
Public Debt ◽  
Real Interest Rate ◽  
Debt Brake ◽  
Long Term Stability ◽  
Low Interest Rates ◽  
New Thinking

AbstractThe German debt brake is not compatible with the long-term stability of the euro. “New thinking” requires that public debt and price stability are no longer opponents, but rather allies in the Keynes world of persistently low interest rates. The proposed balanced account agreement is made more concrete here: An appropriate target (real) interest rate on the global capital market is between one and 1.5% per year lower than the growth rate of the OECD plus China region. If the actual interest rate is below the target rate, the countries with current account surpluses undertake to increase their public debt periodD gradually according to a definite formula. In symmetrical fashion, if the real interest rate is “too high,” countries with current account deficits have the duty to reduce their public debt period. The rules of the balanced account agreement replace the debt brake. They are the instruments of soundfiscal policy.

scholarly journals POPULATION AGING AND THE REAL INTEREST RATE IN THE LAST AND NEXT 50 YEARS: A TALE TOLD BY AN OVERLAPPING GENERATIONS MODEL

2019 ◽  
Vol 24 (8) ◽  
pp. 2060-2103 ◽  
Author(s):  
Nao Sudo ◽  
Yasutaka Takizuka
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Real Interest Rate ◽  
Overlapping Generations ◽  
Population Aging ◽  
Developed Countries ◽  
Demographic Changes ◽  
Real Interest Rates ◽  
Overlapping Generations Model ◽  
The Real

Population aging, along with a secular decline in real interest rates, is an empirical regularity observed in developed countries over the last few decades. Under the premise that population aging will deepen in coming years, some studies predict that real interest rates will continue to be depressed further to a level below zero. In this paper, we address this issue and explore how changes in demographic structures have affected and will affect real interest rates, using an overlapping generations model calibrated to Japan’s economy. We find that the demographic changes over the last 50 years reduced the real interest rate. About 270 out of the 640 basis points decline in real interest rates during this period was due to declining labor inputs and higher saving, which themselves stemmed from the lower fertility rate and increased life expectancy. As for the next 50 years, we find that demographic changes alone will not substantially increase or decrease the real interest rate from the current level. These changes reflect the fact that the size of demographic changes in years ahead will be minimal, but that downward pressure arising from the past demographic changes will continue to bite. As Japan is not unique in terms of this broad picture of changes in demographic landscapes in the last and next 50 years, our results suggest that, sooner or later, a demography-induced decline in real interest rates may be contained in other developed countries as well.

scholarly journals Risk Matters: The Real Effects of Volatility Shocks

2011 ◽  
Vol 101 (6) ◽  
pp. 2530-2561 ◽  
Author(s):  
Jesús Fernández-Villaverde ◽  
Pablo Guerrón-Quintana ◽  
Juan F Rubio-Ramírez ◽  
Martin Uribe
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Open Economy ◽  
Emerging Economies ◽  
Real Interest Rate ◽  
Small Open Economy ◽  
Real Interest Rates ◽  
The Real ◽  
Interest Rate Volatility ◽  
Business Cycle Model

We show how changes in the volatility of the real interest rate at which small open emerging economies borrow have an important effect on variables like output, consumption, investment, and hours. We start by documenting the strong evidence of time-varying volatility in the real interest rates faced by four emerging economies: Argentina, Brazil, Ecuador, and Venezuela. We estimate a stochastic volatility process for real interest rates. Then, we feed this process in a standard small open economy business cycle model. We find that an increase in real interest rate volatility triggers a fall in output, consumption, investment, hours, and debt. (JEL E13, E20, E32, E43, F32, F43, 011)

scholarly journals The Effects of Exchange Rate Volatility, Reserve Volatility and Real Interest Rates on Trade: Applications on Transition Economies

2013 ◽  
Author(s):  
Cevat Gerni ◽  
Selahattin Sarı ◽  
Dilek Özdemir ◽  
Ömer Selçuk Emsen
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Foreign Trade ◽  
Interest Rates ◽  
Transition Economies ◽  
Trade Balance ◽  
Real Interest Rate ◽  
Exchange Rate Volatility ◽  
Real Interest Rates ◽  
The Real

On the basis of volatility or sharp fluctuations in macroeconomic variables, especially in the 1970s, it can be said to play a role in deepening the financial capital deepening. Deepening on volatility forms the basis of not only domestic and but also international economic deviations. With the collapse of the Eastern Bloc, a lot of countries have attempted to liberalize. This situation has caused volatility on mainly rate of exchange then many macroeconomics variables. In this aspect, the multi-relationship between volatility in foreign trade balance and the real interest rate, exchange rate and reserves’ volatility are investigated empirically with the appropriate set of data on 11 transition economies for the period 1996-2011. In this study, the effects of the volatility of foreign trade (netxvol) on the exchange rate volatility (kurvol), reserve volatility (rezvol), and real interest rates subjected with using panel data analysis. Moreover to regression analysis, centred on Granger Causality Test the volatility of the foreign trade balance, import and export volatility, exchange rate volatility, volatility of reserves and try to determine the causal relationship between the real interest rate. The findings have light on that the volatility of trade balance was mostly affected to the volatility of the reserve. It may well be said that the volatility of the interest rate and the exchange rate at the independence of the trade predispose to speculative movements.

scholarly journals REAL INTEREST RATE, INFLATION, EXCHANGE RATE, COMPETITIVENESS AND FOREIGN DIRECT INVESTMENT IN KENYA

2018 ◽  
Vol 3 (1) ◽  
pp. 1-18
Author(s):  
Ndanu Musyoka ◽  
Dr. Kennedy N. Ocharo
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Exchange Rates ◽  
Interest Rates ◽  
Significant Influence ◽  
Direct Investment ◽  
Real Interest Rate ◽  
Series Data ◽  
Real Interest Rates

Purpose: The purpose of this study was to establish the effect of real interest rates, exchange rate, inflation and competitiveness on FDI in Kenya.  Methodology: The study used annual time series data for the period 1970-2016. The sources of data included World Bank Indicators and Kenya National Bureau of Statistics annual reports. Data was collected for the variables real interest rates, exchange rates, inflation rate, competitiveness/ease of doing business and FDI. The data for all the variables was in percentage. The study employed ordinary least square regression technique to determine the effect of real interest rate, exchange rate, inflation and competitiveness on FDI in Kenya. Results: From the findings, the study concluded that real interest rates and exchange rates have negative and significant influence on FDI inflows into Kenya. Further, the study concluded that competitiveness has a positive and significant influence on foreign direct investment inflows into Kenya. However, inflation was found to have insignificant influence on FDI.Unique Contribution to Policy: There is need for favourable interest rates, desirable exchange rates and liberalization of the economy by undertaking comprehensive programmes to trade reforms, designed to open the economy and increase its competiveness. The Kenyan government should also encourage freedom of capital transactions with foreigners and competition in domestic market.

INTERNATIONAL EVIDENCE ON REAL INTEREST RATE PERSISTENCE

2015 ◽  
Vol 60 (04) ◽  
pp. 1550087 ◽  
Author(s):  
ZEYNEL ABIDIN OZDEMIR ◽  
CAGDAS EKINCI ◽  
KORHAN GOKMENOGLU
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Real Interest Rate ◽  
Structural Breaks ◽  
Real Interest Rates ◽  
Ex Post ◽  
Data Generating Process ◽  
The Usa ◽  
The Uk ◽  
Endogenous Structural Breaks

This paper investigates the persistency in the ex-post real interest rates in the presence of endogenous structural breaks for Australia, Austria, Belgium, Canada, Denmark, France, Germany, Ireland, Italy, the Netherlands, New Zealand, Norway, Switzerland, the UK and the USA using seasonally adjusted quarterly data. The procedure used in this study extends the previous research in the respect of investigating degree of persistency of the ex-post real interest rates series by allowing for possible process shifts at endogenously determined more than two structural breaks dates following the principles suggested by Lumsdaine and Papell (1997). The results from the study show that real interest rates are very persistent when such breaks are not taken into account. However, the findings also indicate low persistency in real interest rates for all countries when such breaks are allowed in the data-generating process. We find that endogenously determined structural breaks substantially reduce the degree of persistency of the real interest rate series, which has important theoretical implications as well.

scholarly journals Real interest rate differentials between Central and Eastern European countries and the euro area

Equilibrium ◽  
2019 ◽  
Vol 14 (4) ◽  
pp. 677-693 ◽  
Author(s):  
Jakub Janus
Keyword(s):  
Czech Republic ◽  
Interest Rate ◽  
Interest Rates ◽  
Euro Area ◽  
Real Interest Rate ◽  
Value Added ◽  
Real Interest Rates ◽  
The Czech Republic ◽  
The Real ◽  
Panel Stationarity

Research background: The question of changes in real interest rates differentials between the Euro Area and the CEE countries in the last years is raised because of two main reasons. The first rationale is related to the growing importance of external financial factors for the CEE economies and their monetary autonomy. The second reason is associated with the unprecedented shift in monetary conditions in the EMU, brought about by negative interest rates policy and unconventional policies, and the way it impacts the real rates in the CEE economies. Purpose of the article: This paper aims at exploring the relationship between real interest rates in the Euro Area and ten countries: Albania, Bulgaria, the Czech Republic, Hungary, North Macedonia, Moldova, Poland, Romania, Turkey, and Ukraine. The analysis covers the years of 1999-2018, including periods before and after the financial and economic crisis. Methods: We employ Markov-switching regression to construct the ex-ante real interest rates series in each country, using monthly data on short-term interest rates and CPI inflation rates. A battery of unit root and stationarity test, both standard and panel ones, is applied to examine the real interest rate parity, also allowing for a structural break in the rate differentials. Findings & Value added: We provide detailed evidence on the real interest rates differentials for all of the CEE countries vis-à-vis the Euro Area. We find that, while panel stationarity tests point to the stability of real rate differentials, there are significant dissimilarities across the countries, and the results of the univariate tests are often mixed. At least half of the economies, however, reveal similar patterns of stationarity in real rates relationships. At the same time, we find differentials for the Czech Republic, Hungary, and Poland, countries highly integrated into the EMU economy, to be unstable over time.

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