Rates of interest are falling – Healthcare Economist

…nicely, actual curiosity a minimum of. Whereas within the years for the reason that COVID-19 pandemic have seen nominal rates of interest rising, in the long term actual (i.e., inflation adjusted) rates of interest are falling. A NBER working paper by Obstfeld (2023) supplies compelling proof of this pattern. Present actual rates of interest are probably someplace within the 1%-2% vary. Causes for this pattern embody “demographic shifts, decrease productiveness progress, company market energy, and secure asset demand relative to produce.” Some graphics displaying this pattern are beneath.

One motive why this could matter to well being economics is that many price effectiveness analyses embody a reduction price that reductions future well being good points and prices relative to well being good points and value that accrue within the current. Oftentimes, that low cost price is linked to the true rate of interest within the financial system. If the true rate of interest is falling, ought to the low cost price used for cost-effectiveness fashions and worth evaluation normally additionally fall? One would assume so

You’ll be able to learn the total paper right here.