Neutral real interest rate: A general view

There is generally a very partial view of the neutral real interest rate (which determines the long-term level of the central bank’s key interest rate), since it corresponds to an economy without international capital mobility, where the real interest rate must then effectively balance savings and investment in the long term. But in the general case, the neutral real interest rate has three determinants: The imbalance between savings and investment; The real interest rate in the rest of the world; The discretionary stance of the country's monetary policy. The reality is therefore much more complicated than the basic neutral real interest rate model assumes .