Causes and effects of a low interest period - an empirical analysis with micro- and macrodata


Since the end of the 1980s, interest rates have fallen both nominally and in real terms worldwide. This development can also be observed in Switzerland. This study examines both the causes and effects of the current low-interest phase. The empirical results on a macroeconomic level, in line with empirical literature, indicate that a significant part of the decline in real interest rates can be explained by demographic factors. The age structure in particular shows a correlation to the development of interest rates. Using data from the KOF investment survey, we estimate the effects of real interest rates on firms' investment decisions. Companies increase their capital expenditures by more than 10% as real interest rate expectations decline by one percentage point.

Grundlagen für die Wirtschaftspolitik Nr. 26 (2021) Staatssekretariat für Wirtschaft SECO, Bern, Schweiz
Pascal Seiler
Pascal Seiler
PhD candidate and Consultant