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Keywords:low interest rates 

Discussion Paper
Why Are Interest Rates So Low?

In a recent series of blog posts, the former Chairman of the Federal Reserve System, Ben Bernanke, has asked the question: 'Why are interest rates so low?' (See part 1, part 2, and part 3.) He refers, of course, to the fact that the U.S. government is able to borrow at an annualized rate of around 2 percent for ten years, or around 3 percent for thirty years. If you expect that inflation is going to be on average 2 percent over the next ten or thirty years, this implies that the U.S. government can borrow at real rates of interest between 0 and 1 percent at the ten- and thirty-year ...
Liberty Street Economics , Paper 20150520

Discussion Paper
Low Interest Rates and Bank Profits

The Fed’s December 2015 decision to raise interest rates after an unprecedented seven-year stasis offers a chance to assess the link between interest rates and bank profitability. A key determinant of a bank’s profitability is its net interest margin (NIM)—the gap between an institution’s interest income and interest expense, typically normalized by the average size of its interest-earning assets. The aggregate NIM for the largest U.S. banks reached historic lows in the fourth quarter of 2015, coinciding with the “low for long” interest rate environment in place since the ...
Liberty Street Economics , Paper 20170621

Speech
Financial Stability and Monetary Policy in a Low-Interest-Rate Environment

I thank Kasper Roszbach and the Norges Bank for inviting me to present at this workshop on low-interest-rate and unconventional monetary policy. I applaud the Norges Bank for spurring research on this topic. In a period of less than two decades, the world has experienced two historically deep negative shocks to the global economy and financial system. While their causes were different, the global financial crisis of 2008 and the COVID-19 pandemic crisis each necessitated the intervention of central banks in ways not contemplated in earlier decades. Lessons from the actions taken during the ...
Speech

Working Paper
Low Interest Rates, Policy, and the Predictive Content of the Yield Curve

Does the yield curve’s ability to predict future output and recessions differ when interest rates are low, as in the current global environment? In this paper we build on recent econometric work by Shi, Phillips, and Hurn that detects changes in the causal impact of the yield curve and relate that to the level of interest rates. We explore the issue using historical data going back to the 19th century for the United States and more recent data for the United Kingdom, Germany, and Japan. This paper is similar in spirit to Ramey and Zubairy (2018), who look at the government spending ...
Working Papers , Paper 20-24

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