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We use a semi structural model to estimate neutral rates in the United States. Our Bayesian estimation incorporates prior information on the output gap and potential output (based on a production function approach) and accounts for unconventional monetary policies at the ZLB by using estimates of “shadow” policy rates. We find that our approach provides more plausible results than standard maximum likelihood estimates for the unobserved variables in the model. Results show a significant trend decline in the neutral real rate over time, driven only in part by a decline in potential growth whereas other factors (including excess global savings) matter. Neutral rates likely turned negative during the Global Financial Crisis and are expected to increase only gradually looking forward.

Interest rates -- United States. --- Interest rates. --- Monetary policy -- United States. --- Monetary policy. --- Banks and Banking --- Macroeconomics --- Production and Operations Management --- Monetary Policy --- Macroeconomics: Production --- Interest Rates: Determination, Term Structure, and Effects --- Financial Crises --- Banking --- Economic & financial crises & disasters --- Central bank policy rate --- Output gap --- Global financial crisis of 2008-2009 --- Potential output --- Production growth --- Financial services --- Production --- Financial crises --- Economic theory --- Interest rates --- Global Financial Crisis, 2008-2009 --- United States

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This paper studies the long-run impact of public debt expansion on economic growth and investigates whether the debt-growth relation varies with the level of indebtedness. Our contribution is both theoretical and empirical. On the theoretical side, we develop tests for threshold effects in the context of dynamic heterogeneous panel data models with cross-sectionally dependent errors and illustrate, by means of Monte Carlo experiments, that they perform well in small samples. On the empirical side, using data on a sample of 40 countries (grouped into advanced and developing) over the 1965- 2010 period, we find no evidence for a universally applicable threshold effect in the relationship between public debt and economic growth, once we account for the impact of global factors and their spillover effects. Regardless of the threshold, however, we find significant negative long-run effects of public debt build-up on output growth. Provided that public debt is on a downward trajectory, a country with a high level of debt can grow just as fast as its peers in the long run.

Debts, Public --- Economic development --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Econometric models. --- Econometrics --- Financial Risk Management --- Inflation --- Macroeconomics --- Public Finance --- 'Panel Data Models --- Spatio-temporal Models' --- Fiscal Policy --- International Lending and Debt Problems --- Truncated and Censored Models --- Switching Regression Models --- Threshold Regression Models --- Macroeconomics: Production --- Debt Management --- Sovereign Debt --- Price Level --- Deflation --- Financial Crises --- Econometrics & economic statistics --- Public finance & taxation --- Economic & financial crises & disasters --- Threshold analysis --- Production growth --- Financial crises --- Econometric analysis --- Production --- Prices --- Economic theory --- United States

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Balance sheet recessions have been a drag on activity after the Global Financial Crisis, underscoring the important role of balance sheet adjustment for resuming sustained growth. In this paper we examine private sector deleveraging experiences across 36 advanced and emerging economies countries since 1960. We consider the common features and divergent experiences of deleveraging episodes across countries, and analyze empirically the impact of different aspects of deleveraging during the bust phase of leverage cycles on subsequent medium-term growth. The results suggest that larger and quicker unwinding of non-financial sector debt overhangs is associated with sizable medium-term output gains, and that policies should focus on facilitating up-front balance sheet adjustment.

Financial leverage. --- Financial statements. --- Business cycles. --- Economic development. --- Economic policy. --- Economic nationalism --- Economic planning --- National planning --- State planning --- Economics --- Planning --- National security --- Social policy --- Development, Economic --- Economic growth --- Growth, Economic --- Economic policy --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- Economic cycles --- Economic fluctuations --- Cycles --- Balance sheets --- Corporate financial statements --- Earnings statements --- Financial reports --- Income statements --- Operating statements --- Profit and loss statements --- Statements, Financial --- Accounting --- Bookkeeping --- Business records --- Corporation reports --- Leverage, Financial --- Finance --- Financial Risk Management --- Macroeconomics --- Public Finance --- Macroeconomics: Consumption --- Saving --- Wealth --- Money Supply --- Credit --- Money Multipliers --- Financial Crises --- Bankruptcy --- Liquidation --- 'Panel Data Models --- Spatio-temporal Models' --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- Debt --- Debt Management --- Sovereign Debt --- Public Administration --- Public Sector Accounting and Audits --- Macroeconomics: Production --- Economic & financial crises & disasters --- Public finance & taxation --- Financial reporting, financial statements --- Private debt --- Financial crises --- Public debt --- Financial statements --- Production growth --- National accounts --- Public financial management (PFM) --- Production --- Debts, Public --- Finance, Public --- Economic theory --- United States