Rents, Technical Change, and Risk Premia Accounting for Secular Trends in Interest Rates, Returns on Capital, Earning Yields, and Factor Shares
The secular decline in safe interest rates since the early 1980s has been the subject of considerable attention. In this short paper, we argue that it is important to consider the evolution of safe real rates in conjunction with three other first-order macroeconomic stylized facts: the relative cons...
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| Format: | Article |
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American Economic Association
2018
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| Online Access: | http://hdl.handle.net/1721.1/113841 https://orcid.org/0000-0003-2760-451X |
| _version_ | 1811085959100366848 |
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| author | Caballero, Ricardo J Farhi, Emmanuel Gourinchas, Pierre-Olivier |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Caballero, Ricardo J Farhi, Emmanuel Gourinchas, Pierre-Olivier |
| author_sort | Caballero, Ricardo J |
| collection | MIT |
| description | The secular decline in safe interest rates since the early 1980s has been the subject of considerable attention. In this short paper, we argue that it is important to consider the evolution of safe real rates in conjunction with three other first-order macroeconomic stylized facts: the relative constancy of the real return to productive capital, the decline in the labor share, and the decline and subsequent stabilization of the earnings yield. Through the lens of a simple accounting framework, these four facts offer suggestive insights into the economic forces that might be at work. |
| first_indexed | 2024-09-23T13:18:33Z |
| format | Article |
| id | mit-1721.1/113841 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T13:18:33Z |
| publishDate | 2018 |
| publisher | American Economic Association |
| record_format | dspace |
| spelling | mit-1721.1/1138412024-06-27T19:19:31Z Rents, Technical Change, and Risk Premia Accounting for Secular Trends in Interest Rates, Returns on Capital, Earning Yields, and Factor Shares Caballero, Ricardo J Farhi, Emmanuel Gourinchas, Pierre-Olivier Massachusetts Institute of Technology. Department of Economics Caballero, Ricardo J Farhi, Emmanuel Gourinchas, Pierre-Olivier The secular decline in safe interest rates since the early 1980s has been the subject of considerable attention. In this short paper, we argue that it is important to consider the evolution of safe real rates in conjunction with three other first-order macroeconomic stylized facts: the relative constancy of the real return to productive capital, the decline in the labor share, and the decline and subsequent stabilization of the earnings yield. Through the lens of a simple accounting framework, these four facts offer suggestive insights into the economic forces that might be at work. 2018-02-20T20:02:54Z 2018-02-20T20:02:54Z 2017-05 2018-02-20T17:03:55Z Article http://purl.org/eprint/type/JournalArticle 0002-8282 1944-7981 http://hdl.handle.net/1721.1/113841 Caballero, Ricardo J. et al. “Rents, Technical Change, and Risk Premia Accounting for Secular Trends in Interest Rates, Returns on Capital, Earning Yields, and Factor Shares.” American Economic Review 107, 5 (May 2017): 614–620 © 2017 American Economic Association https://orcid.org/0000-0003-2760-451X http://dx.doi.org/10.1257/AER.P20171036 American Economic Review Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use. application/pdf American Economic Association American Economic Association |
| spellingShingle | Caballero, Ricardo J Farhi, Emmanuel Gourinchas, Pierre-Olivier Rents, Technical Change, and Risk Premia Accounting for Secular Trends in Interest Rates, Returns on Capital, Earning Yields, and Factor Shares |
| title | Rents, Technical Change, and Risk Premia Accounting for Secular Trends in Interest Rates, Returns on Capital, Earning Yields, and Factor Shares |
| title_full | Rents, Technical Change, and Risk Premia Accounting for Secular Trends in Interest Rates, Returns on Capital, Earning Yields, and Factor Shares |
| title_fullStr | Rents, Technical Change, and Risk Premia Accounting for Secular Trends in Interest Rates, Returns on Capital, Earning Yields, and Factor Shares |
| title_full_unstemmed | Rents, Technical Change, and Risk Premia Accounting for Secular Trends in Interest Rates, Returns on Capital, Earning Yields, and Factor Shares |
| title_short | Rents, Technical Change, and Risk Premia Accounting for Secular Trends in Interest Rates, Returns on Capital, Earning Yields, and Factor Shares |
| title_sort | rents technical change and risk premia accounting for secular trends in interest rates returns on capital earning yields and factor shares |
| url | http://hdl.handle.net/1721.1/113841 https://orcid.org/0000-0003-2760-451X |
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