The determinants of real long-term interest rates: A vital question

It is real , not nominal, long-term interest rates that affect demand for goods and services, asset prices and debt sustainability. To find out whether or not real long-term interest rates are going to rise, we need to examine their determinants, which may be: Structural factors: potential growth, the savings-investment equilibrium, the level of debt; Monetary policies, in particular how intensely they respond to inflation (or deflation) and how determined they are to support growth; Both: how monetary policies respond to structural factors (if there are excess savings, central banks may opt for a more expansionary monetary policy). Statistical analysis of the United States and the euro zone shows that: The real long-term interest rate depends on both monetary policy and structural factors; But monetary policy (short-term interest rates, quantitative easing) also depends on structural factors. Structural factors therefore have both a direct effect and an indirect effect, via monetary policy, on real long-term interest rates.