Low Frequency Drivers of the Real Interest Rate: A Band Spectrum Regression Approach

Based on expert practice, the article analyzes main questions that experts are asked to solve when forensic economic examinations are commissioned in order to study documents on financial and credit transactions. The article provides a detailed consideration of problems that are connected with determining the total cost of the credit and calculation of the real interest rate for the use of credit resources, as well as the methods to calculate and use the floating interest rate when the credit agreement is concluded. It analyzes the most important tasks that experts solve in the course of the studies on the abovementioned questions. The article provides normative acts that regulate the order for disclosing information on the total cost of credit resources when credit agreements are concluded, the order for the formation of the floating interest rate. It considers problematic aspects of conducting examinations of documents on financial and credit transactions and offers proposals on amending and updating the array of methods in this area of research.

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The Interest Rate Effect on Private Saving: Alternative Perspectives

Journal of International Commerce Economics and Policy ◽

10.1142/s1793993319500029 ◽

2019 ◽

Vol 10 (01) ◽

pp. 1950002 ◽

Cited By ~ 1

Author(s):

Joshua Aizenman ◽

Yin-Wong Cheung ◽

Hiro Ito

Keyword(s):

Interest Rate ◽

Real Interest Rate ◽

Age Dependency ◽

Output Volatility ◽

The Real ◽

Private Saving ◽

Percentage Point Increase ◽

Point Increase ◽

Rate Environment ◽

The Interest Rate

Lowering the policy interest rate could stimulate consumption and investment while discouraging people from saving. However, such a move may also prompt people to save more to compensate for the low rate of return. Using the data of 135 countries from 1995 to 2014, we show that a low interest rate environment can yield different effects on private saving under different economic environments. The real interest rate affects private saving negatively if output volatility, old-age dependency, or financial development is above a certain threshold. Depending on a country’s specific economic circumstances, these effects are significant for the economy — a four-percentage point decline in the real interest rate, which is approximately the same as one standard deviation for China, would lead to a 1.52 percentage point increase in the Chinese private saving rate. Further, when the real interest rate is below 1.1%, greater output volatility would lead to higher private saving in developing countries.

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

Macroeconomic Dynamics ◽

10.1017/s1365100519000105 ◽

2019 ◽

Vol 24 (8) ◽

pp. 2060-2103 ◽

Cited By ~ 4

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.

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