If the new explanation is true, it might also explain why efforts to boost economic growth — including trillions of dollars in monetary stimulus and near-zero interest rates — haven't worked that well. In fact, most of the relevant changes that have weighed on growth and interest rates took place before the 1980s. The aging and retirement of the boomers also put downward pressure on America’s interest rates, the economists say. Low interest rates also leave central bankers with little capacity to stimulate growth in the future by cutting interest rates. And their model suggests that low interest rates, low economic growth and low investment are here to stay, since America’s working population is not set to grow much in coming decades.

Source: Washington Post October 07, 2016 16:18 UTC