Journal
INTERNATIONAL REVIEW OF ECONOMICS & FINANCE
Volume 76, Issue -, Pages 1164-1190Publisher
ELSEVIER
DOI: 10.1016/j.iref.2021.08.012
Keywords
Safe haven; Portfolio flows; Natural interest rate; Secular stagnation; stagnation Euro area member countries
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This article introduces a new measure to capture safe haven flows for twelve Euro area countries and estimates the impact on the natural rate of interest. The study shows that the natural rate tends to decrease in countries with safe haven inflows and increase in countries with safe haven outflows.
This article introduces a new measure to capture safe haven flows for twelve Euro area countries. Since those flows are suspected to alter the natural rate of interest, which is at the heart of the discussion whether certain countries face a period of secular stagnation, we estimate the natural rate including those flows explicitly. It is shown that adding this measure indeed changes the estimated natural rate and thus the degree of evidence of secular stagnation in various countries. It is found that the natural rate tends to decrease in countries with safe haven inflows and increases in countries with safe haven outflows.
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