November 29, 2016

Low Interest Rates and the Economy: A Mercatus Colloquium

Invited scholars have contributed essays that bring the best theory and data to bear on the following question as it applies to their individual research focus: “What are the fiscal and economic implications of current low interest rates and of a 200-basis-point increase in the bellwether rates?” In their essays, the authors discuss predictable implications as well as less foreseeable issues. They explore why interest rates are where they are now and what such rates mean for retirement, Social Security, US debt, interest on the US debt, and other related economic questions.

Contributors are affiliated with the Mercatus Center and other research centers that focus on economic policy issues. 

  • This series about the economic and fiscal effects of an interest rate change has left as largely unaddressed how a policy of maintaining historically low interest rates and how an abrupt departure

    William Beach
    December 14, 2016
  • US monetary and trade policies may seem to be disconnected disciplines, but they are bound together by the transmission belt of the dollar’s value in foreign currency markets. Whether US interest rates are low or high will affect US trade accounts along with the domestic economy.

    Daniel Griswold
    December 13, 2016
  • Over the past decade, interest rates on government debt have remained remarkably low by historical standards, with some countries even venturing into negative-rate territory.

    Alan Auerbach, William Gale, Aaron Krupkin
    December 12, 2016
  • I’ve spoken on Social Security and retirement security issues at various events in recent years.

    Jason J. Fichtner
    December 9, 2016
  • Eight years after a very deep recession, interest rates are near zero. Some investors must think the rates will stay there because they buy long-term bonds that pay very little or no interest. Nothing similar has happened before.

    Allan H. Meltzer
    December 8, 2016
  • Over the past few years, both real and nominal interest rates have fallen to unusually low levels.

    Scott Sumner
    December 7, 2016
  • Ultralow interest rates have made deficit financing virtually free for the federal government, which is probably why today’s policymakers, candidates for political office, the public, and the media seem much less worried about public debt than they were during the 1980s and 1990s.

    Rudolph G. Penner
    December 6, 2016
  • Municipal finances have been shaped by a historic period of protracted low interest rates—perhaps most significantly for the pension plans offered by states and many local governments.

    Eileen Norcross
    December 5, 2016
  • What are the fiscal implications of low interest rates, and what would be the implications of a sharp rise in rates?

    Arnold Kling
    December 2, 2016
  • As the Mercatus Center’s Scott Sumner often says, one ought never to reason from a price change.

    George Selgin
    December 1, 2016
  • Interest rates in advanced economies are at record-low levels, in some cases even below zero.

    Joseph E. Gagnon
    November 30, 2016
  • Bellwether interest rates across the world began declining in 2008 and reached historically low levels in 2016. Some, such as 10-year German and Swiss bonds, hit negative values.

    David Beckworth
    November 29, 2016