Let me emphasise what I am saying so that I am not misunderstood. I am saying that rates are likely to be low in the long run, compared to the historical average of recent decades, but not as low as immediately before the pandemic. That means we should not expect rates to be very much lower than they are today, a little lower, but not very much. An example, which is not a prediction but is meant to illustrate the point, is that a nominal r* of around 3.5 is probably not a super crazy assumption. With the 10-year Treasury bond currently trading at just over 4%, this implies slightly lower rates than today, but not much lower rates. At the same time, I think there is in particular one thing that could alter this picture: very high debt levels. I think exploding debt, particularly in the US, is probably the biggest risk to the base case scenario of low equilibrium interest rates in the future.
- Date Posted:
- December 8, 2023
We investigate empirically and cross-nationally whether a media treatment featuring a narrative about inequality as the result of a system rigged in favor of the rich increases preferences for redistribution. We administer this “rigged system” treatment to 7,426 online survey respondents in six countries: Australia, France, Germany, Switzerland, the United States, and the United Kingdom. Our experimental treatments include indicators of inequality in the six countries – including the ratio of CEO pay to average worker pay and the assets of the wealthiest one percent of the population – nested within a common media frame that emphasizes these facts as indicative of a fundamentally unfair system that favors the rich. We then probe respondents’ views on a variety of redistributive policies, which we combine into a single indicator of redistributive attitudes. Consistent with our pre-registered expectation, we find that the rigged system treatment significantly increases redistributive preferences in five of the countries. In the sixth – the United States – our treatment has no effect.