Ruhr Economic Papers

Ruhr Economic Papers #831

Safe Haven Flows, Natural Interest Rates and Secular Stagnation - Empirical Evidence for Euro Area Countries

by Ansgar Belke and Jens Klose

UDE, 12/2019, 52 S./p., 10 Euro, ISBN 978-3-86788-964-3 DOI: 10.4419/86788964



This article introduces a new measure to capture safe haven flows for twelve Euro area countries. Since those flows are suspected to alter the natural rate of interest, which is at the heart of the discussion whether certain countries face a period of secular stagnation, we estimate the natural rate including those flows explicitly. It is shown that adding this measure indeed changes the estimated natural rate and thus the degree of evidence of secular stagnation in various countries. It is found that the natural rate tends to
decrease in countries with safe haven inflows and increases in countries with safe haven outflows.

JEL-Classification: E43, F45, C32

Keywords: Safe haven; portfolio flows; natural interest rate; secular stagnation; Euro area member countries