Handbook of Economic Stagnation

Chapter Sixteen: Secular stagnation and the age of ultra-low interest rates

Eric Tymoigne      Department of Economics, Lewis & Clark College, Portland, OR, United States

Abstract

Under the guidance of monetary policy, interest rates have been on a declining trend for decades and reached all-time low in 2019, with a large proportion of securities having negative yields. While the COVID-19 pandemic reversed the negative yield trend on long-term rates, the economic environment that has produced ultra-low interest rates is still present. Rising income and wealth inequalities, slow jobless recoveries, low inflation, and a long-term trend toward a shrinking population in developed economies point toward the persistence of a low-growth, low-interest-rates ...