Are Interest Rates Really Low? / Daniel R. Feenberg, Clinton Tepper, Ivo Welch.

Format:

Book

Author/Creator:

Feenberg, Daniel R.

Contributor:

National Bureau of Economic Research.

Tepper, Clinton.

Welch, Ivo.

Series:

Working Paper Series (National Bureau of Economic Research) no. w24258.

NBER working paper series no. w24258

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

Contrary to common perception, many fixed-income investors have not suffered unusually low real interest rates in and after the Great Recession of 2008. This is because taxable investors must first pay taxes on nominal interest returns, before inflation further reduces their earned real interest rates. To obtain the same real after-tax yield, investors need more than one-to-one compensation for inflation. As a result, long-term Treasury bonds have been no less attractive for taxable investors in 2016 (with a 1.0% post-tax real yield) than they were in 2006 (0.5%), 1976 (-1.7%), 1966 (0.9%), and 1956 (0.8%), although they have been less attractive than they were in 1996 (2.4%) and 1986 (2.9%). Short-term Treasury bond yields have been on the low side but have also not been particularly unusual.

Notes:

Print version record

January 2018.