The Natural Interest Rate

The nachral interest rate--some say neutral, Is the rate when the output gap is closed. It goes down when the saving rate goes up. It goes up when the saving rate goes down. It's up with higher population growth. It's up with higher technology growth. For why, turn to the Solow Growth Model. All of these are very-long run effects. One-time shocks have effects that fade away. And note: in an open economy, Higher saving rates in other countries Can also lower the Na Chur All rate