How Do Demographics Influence r*?

Abstract: Demographic trends are evolving in the U.S. as well as globally, potentially affecting the behavior of interest rates. This includes the natural rate of interest, denoted r*. Through the lens of a simple model, we describe supply and demand channels through which these demographic trends may affect r* and show a range of estimates for the potential quantitative impact.

Keywords: nterest rates; natural rate of interest; r*; demographics;

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Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Richmond Fed Economic Brief

Publication Date: 2024-06

Volume: 24

Issue: 18