English, Article, Journal or magazine article edition: THE EFFECT OF LABOUR SHARE ON THE NATURAL RATE OF INTEREST: SOME EMPIRICAL EVIDENCE Pedro Gomes; Pedro Bom; Pedro Leão

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Bookmark: http://trove.nla.gov.au/version/123481
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • THE EFFECT OF LABOUR SHARE ON THE NATURAL RATE OF INTEREST: SOME EMPIRICAL EVIDENCE
Author
  • Pedro Gomes
  • Pedro Bom
  • Pedro Leão
Physical Description
  • preprint
Notes
  • Standard estimations of Taylor.s (1993) monetary policy rule assume that the natural real rate of interest can be regarded as constant. By contrast, based on Mankiew (2000) theory of Savers and Spenders, we argue that the natural rate is related to the distribution of income between the two types of agents. We show evidence from the U.S., based on a respecication of the Taylor rule proposed by Clarida et al. (2000), that the natural rate of is positively in.uenced by the long-run movements of the labour share in the national income. As the labour share has been falling since 1980s, our results indicate that the natural real interest rate fell from around 6% to around 2% in the beginnings of our decade.
  • RePEc:anp:en2005:026
Language
  • English
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