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An international analysis of the trend five-year government bond rate
Reserve Bank of Australia, Sydney New South Wales, Australia; Sveriges Riksbank, Stockholm, Sweden.
Örebro University, Örebro University School of Business. National Institute of Economic Research, Stockholm, Sweden.ORCID iD: 0000-0002-4840-7649
School of Economics, University of Kent, Canterbury, UK.
2025 (English)In: Scottish Journal of Political Economy, ISSN 0036-9292, E-ISSN 1467-9485Article in journal (Refereed) Epub ahead of print
Abstract [en]

Employing an unobserved components stochastic volatility model, we estimate the trend 5-year government bond rate in Canada, Norway, Sweden, Switzerland, the United Kingdom and the United States. Our results suggest that the estimated trend rate has decreased substantially between 2000 and 2020 in all six countries. In Norway, Switzerland and the United Kingdom, the trend rate has increased non-negligibly since 2020; in Canada, Sweden and the United States, the trend rate has not been affected much by the increase in the actual 5-year government bond rate. At the end of the sample, none of the countries has a trend rate higher than 3%. The model hence suggests that the 5-year government bond rate will be fairly low in the medium-to-long run.

Place, publisher, year, edition, pages
John Wiley & Sons, 2025.
Keywords [en]
Bayesian estimation, unobserved components model
National Category
Economics
Identifiers
URN: urn:nbn:se:oru:diva-120792DOI: 10.1111/sjpe.12381ISI: 001468671200001OAI: oai:DiVA.org:oru-120792DiVA, id: diva2:1954841
Funder
The Jan Wallander and Tom Hedelius Foundation, B20- 0020Available from: 2025-04-28 Created: 2025-04-28 Last updated: 2025-04-28Bibliographically approved

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