Journal Article

The global saving glut and the fall in U.S. real interest rates: A 15-year retrospective

Abstract: The authors revisit Ben Bernanke’s global saving glut (GSG) hypothesis from 2005—which links low long-term real interest rates in the United States to excess saving in a number of non-Western countries, including, but not limited to, China. Using an analytical framework and empirical data, they find that the ability of the GSG hypothesis to explain the fall in long-term real rates between 2002 and 2006 is likely much greater than its ability to account for the further fall in these rates from the Great Recession onward.

Keywords: global saving glut; saving and investment; current account; capital flows; long-term interest rates; real interest rates;

JEL Classification: E00; F00;

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Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Economic Perspectives

Publication Date: 2021-03-31

Issue: EP-2021-1

Pages: 15