Are trends in savings, capital, public debt and real interest rates since the subprime crisis compatible?
We look at the world and the OECD. Since the subprime mortgage crisis: Per capita capital has grown at a slower rate; Public debt has increased; Private sector savings have increased, but this increase has been absorbed by increasing fiscal deficits and public debt. We also see that: Real wages have risen at a slower pace, which is consistent with the slowdown in per capita capital; The real interest rate has fallen, which can be consistent with the fall in per capita capital only if there has been a marked slowdown in total factor productivity. The most important developments since the subprime crisis are therefore the decline in capital accumulation and the decline in the efficiency of the economy. The "worst-case" scenario would be one where the same developments occur after the COVID crisis.