Paul Schmelzing — Global real interest rates since 1311: Renaissance roots and rapid reversals

I take long-term historical studies like this is a large grain of salt, for lack of homogeneity and the difficulty in obtaining reliable data, for example, but it is interesting to look at anyway with caveats.

What is probably most interesting about it now is that the Bank of England is apparently looking at this.

Conclusion

On aggregate, then, the past 30-odd years more than hold their own in the ranks of historically significant rate depressions. But the trend fall seen over this period is a but a part of a much longer ”millennial trend”. It is thus unlikely that current dynamics can be fully rationalized in a “secular stagnation framework”. Meanwhile, looking at past cyclical patterns, the evidence suggests that when rate cycles turn, real rates can relatively swiftly accelerate.

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Global real interest rates since 1311: Renaissance roots and rapid reversals

Paul Schmelzing, visiting scholar at the Bank of England from Harvard University, where he concentrates on 20th century financial history