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Key Findings Details

Uncovering the Relationship between Real Interest Rates and Economic Growth
Bruce Hansen and Ananth Seshadri
WP 2013-303

  • There is little theoretical or empirical guidance on the long-run relationship between real interest rates and economic growth.
  • Real interest rates and economic growth have an estimated long-run correlation of -0.2.
  • This mild negative correlation suggests that the variability in interest rates and growth slightly offset one another.