IMF Guest Lecture: World Economic Outlook
23 April, 2014
2:30pm – 3:45pm
Dr Davide Furceri is an economist at the Research Department of the International Monetary Fund in the World Economic Studies division. Dr Furceri will present a guest lecture on World Economic Outlook, details below:
Real interest rates worldwide have declined substantially since the 1980s and are now in slightly negative territory. Common factors account for much of these movements, highlighting the relevance of global patterns in saving and investment. Since the late 1990s, three factors appear to account for most of the decline. First, a steady increase in income growth in emerging market economies during 2000-07 led to substantially higher saving rates in these economies. Second, the demand for safe assets increased, largely reflecting the rapid reserve accumulation in some emerging market economies and increases in the riskiness of equity relative to bonds. Third, there has been a sharp and persistent decline in investment rates in advanced economies since the global financial crisis. This chapter argues that global real interest rates can be expected to rise in the medium term, but only moderately, since these three factors are unlikely to reverse substantially. The zero lower bound on nominal interest rates will remain a concern for some time. Real interest rates will likely remain low enough for the zero lower bound to re-emerge should risks of very low growth in advanced economies materialize.
Location: Merewether Lecture Room 5 (Rm 277)
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