New study reveals key factors driving economic growth and interest rates.
The article explores how different economic shocks affect the relationship between output and interest rates in the U.S. The researchers found that shocks to technology and monetary policy can explain the behavior of interest rates, with future productivity news influencing real interest rates. During the Great Inflation, inflation shocks played a key role, while in the Great Moderation, technology shocks were more important in driving the relationship between output and interest rates.